Media reports suggest that the Bank of Japan may tweak Yield Curve Control yet again at next week’s meeting, but we aren’t convinced the Bank will lift the 10-year yield cap just three months after the previous large increase in July. Meanwhile, the continued weakening of the yen means that Germany’s economy is now significantly larger than Japan’s when measured at market exchange rates. And while the renewed strengthening of the yen that we anticipate over the next couple of years should result in a few more twists and turns in that race, Japan will continue to slip down the ranks over the coming decades.
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