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The economic data have started the week on a brighter note. Admittedly, the upward revision to Q1 GDP is largely old news and the detail is less positive. However, the May readings on consumer confidence and the Economy Watchers Survey (EWS) suggest that …
10th June 2013
If the recent volatility in Japan’s equity and bond markets was not enough to undermine confidence, the yen has also rebounded in the last few days. However, the partial recovery in the Japanese currency should not be a major concern – whether for …
The Bank of Japan’s two-day June meeting (which concludes on Tuesday) is unlikely to result in any major policy changes. The Board will probably discuss tweaks to its money market operations and asset purchases in response to the recent market volatility. …
6th June 2013
Judging by the initial market reaction and media coverage, PM Abe’s “growth strategy” already appears to be a damp squib. To be fair, it was always unrealistic to expect a Prime Ministerial speech in a Tokyo hotel to provide a lot more detail than has …
5th June 2013
After a strong start to the year, the early signals for the second quarter have been mixed. Business and consumer confidence is still at high levels, although it remains to be seen whether this will be sustained given the recent volatility in financial …
Although barely on the radar of most investors just yet, the Abe government’s decision on whether to press ahead with the planned fiscal tightening in 2014 and beyond may well be the most important policy event in the remainder of this year. Indeed, in …
3rd June 2013
Japan’s inflation rates look set to turn positive soon. Admittedly, nationwide inflation was still firmly negative on a year-on-year basis in April. But the more timely data for the Tokyo CPI in May looked rather better. What’s more, prices were already …
Despite all the hype about “Abenomics” already encouraging a surge in consumer spending, the hard data on retail sales remain subdued. This makes sense given the persistent weakness of employment and wages, which are far more important drivers of spending …
29th May 2013
The incoming economic data are of course being overshadowed by the market volatility, but today’s Shoko Chukin survey suggests that small businesses may be losing a little faith in “Abenomics” too. … Small business survey illustrates risks to …
28th May 2013
If the global financial community was not already following the progress of “Abenomics” closely, Thursday’s slump in the Nikkei has certainly focused worldwide attention on what is happening in Japan. However, we think it would be quite wrong, or at least …
27th May 2013
Today’s slump is not necessarily the end of the bull market in Japanese equities, but the next few months will be much harder going. We continue to expect the Nikkei to fall further, probably below 13,000, before the end of 2013. … Boost to Nikkei from …
23rd May 2013
The Bank of Japan’s inaction today was no surprise, nor was Governor Kuroda’s relatively sanguine attitude to the jump in JGB yields. However, the April external trade data were disappointing and the details were only slightly better than the headlines. … …
22nd May 2013
The Bank of Japan’s two-day meeting (which concludes on Wednesday) is unlikely to result in any major policy changes. Governor Kuroda will want to address the recent jump in JGB yields, although we believe he would be justified in taking a relatively …
20th May 2013
The encouraging first quarter GDP data have prompted us to revise up our growth forecast for 2013 as a whole. However, while “Abenomics” has certainly boosted sentiment, the jury is still out on whether the underlying economic fundamentals will improve …
Japan’s healthy-looking GDP data are the first substantial piece of good economic news under the Abe government. It is debatable just how much of the acceleration is due to “Abenomics” and how much is simply a temporary rebound from earlier weakness that …
16th May 2013
There are some encouraging signs in Japan’s latest monetary aggregates but it remains too early to tell whether the Bank of Japan’s policy shift last month is feeding the hoped-for acceleration in broad money and credit. … Monetary Indicators Monitor …
The election of a new government under Prime Minister Abe has certainly transformed market sentiment towards Japan over the past six months. However, taking a closer look at each of the components of the policies collectively known as “Abenomics”, doubts …
15th May 2013
Japan’s equity markets may still be gripped by euphoria, but the recovery in consumer confidence faltered in April. This coincided with a jump in inflation expectations in the wake of the Bank of Japan’s announcement of “bold easing”, providing further …
The jump in the yields of Japanese government bonds (JGBs) in the last few days probably reflects a confluence of many factors, including speculation that domestic institutions are set to step up their diversification into foreign bonds and local …
14th May 2013
The yen finally weakened past 100 to the dollar on Friday, giving the Nikkei another major boost. The timing has been widely attributed to the release of data showing that Japanese investors were net buyers of overseas bonds for a second successive week. …
13th May 2013
The yen fell sharply against the US dollar immediately after the Bank of Japan announced its aggressive monetary easing on 4th April, while equity markets surged. Equities have continued to rise over the past couple of weeks but the slide in the yen …
7th May 2013
This report is only available as a PDF. Click to download. … Is consumer spending already taking off? …
6th May 2013
Despite the widespread optimism about the benefits that “Abenomics” may eventually bring to Japanese businesses and households, the hard data continue to disappoint. In particular, industrial production was sluggish in March for the third successive …
30th April 2013
The failure of the yen to weaken past 100 to the dollar has caused some second thoughts in the markets, but we continue to expect the Japanese currency to fall substantially further. … What next for the …
29th April 2013
Friday’s Bank of Japan meeting was mainly concerned with tying up loose ends left over after the policy overhaul earlier in April. But it also revealed that some Policy Board members are unconvinced that the Bank can meet its inflation target even after …
The focus at Friday’s meeting of the Policy Board will be on the new GDP and inflation forecasts to be published in the Bank’s “Outlook for Economic Activity and Prices”. Monetary policy itself was overhauled at the first April meeting and it is unlikely …
22nd April 2013
Most commentators appear to have taken official estimates of the scale of the fiscal stimulus in 2013 entirely at face value. At the same time, they are ignoring the elephant in the room – the planned doubling of the consumption tax in two stages in 2014 …
The latest data on Japan’s monetary aggregates, which predate the Bank of Japan’s policy shift earlier this month, illustrate why a radical change was needed. But they also underline that the success of the bold new approach is not guaranteed. … …
19th April 2013
The March data on exports and the overall trade balance were marginally better than the consensus had expected, but the detail is less encouraging. In particular, the improvement in exports probably reflects the recovery in the global economy, which may …
18th April 2013
Consumer confidence rose in March, but by less than expected. What’s more, Japanese households may not view the prospect of an end to deflation quite as positively as businesses and investors. … Boost to confidence from “Abenomics” may be …
17th April 2013
After initially declining, JGB yields are now higher than they were before the Bank of Japan announced its bold monetary easing. This result is not as perverse as it may seem, nor is it necessarily alarming. The fact that JGB yields are slightly higher …
15th April 2013
The much more ambitious policy stance adopted by the Bank of Japan should keep the yen on a weakening trend, but the scope for a further boost to Japan’s stock market may be limited. … More downside for yen than upside for …
8th April 2013
The Bank of Japan upended expectations for monetary easing at its first April meeting and, in doing so, put the ball back into the government’s court. “Abenomics” was always meant to include structural reform alongside monetary stimulus. Forthcoming talks …
By committing today to meet a 2% inflation target in two years, Governor Kuroda can justifiably claim to have set the Bank of Japan on a new path. But while markets have welcomed the announcement, the credibility of this pledge is soon likely to be called …
4th April 2013
For all the optimism engendered by “Abenomics”, the recent hard data on Japan’s economy have been disappointing. Of course, it is too soon for the arrival of a new group of policymakers to be having much effect on the ground. But it is a concern that some …
3rd April 2013
The Bank of Japan’s Tankan survey for March (to be released on Monday) will probably show that large manufacturers thought business conditions were less negative in the first quarter and might even turn marginally positive in the second. This would be a …
1st April 2013
It is a near certainty that at least one of the two Bank of Japan Board meetings in April will result in a further loosening in monetary policy. Indeed, we would not be surprised to see both meetings conclude with announcements of some form of additional …
27th March 2013
The headlines from the latest small business survey are positive but the detail includes some potentially worrying signs that the economic recovery may already be running out of steam. … Small business survey raises some warning …
26th March 2013
The latest Flow of Funds report, published today by the Bank of Japan, confirms that the surge in equity prices on the back of the “Abe trade” has boosted the value of household assets, but also that this boost is relatively small. Hopes of a significant …
25th March 2013
A slew of data in the coming week will provide a check-up on the health of the Japanese economy as we approach the end of the first quarter. Surveys of consumer and business confidence show no sign that the Prime Minister Abe’s honeymoon period is waning, …
The seasonally-adjusted trade deficit widened to a new record in February, reflecting a mix of sluggishness in key export markets, Lunar New Year distortions and the impact of yen weakness on the cost of the commodities that Japan has to buy abroad. As …
21st March 2013
A look back at the Bank of Japan’s actions under Governor Shirakawa suggests that many commentators have been judging him too harshly. Monetary policy was loosened much less aggressively in Japan than in the US or the UK in the wake of the global …
18th March 2013
High hopes are resting on the ability of the Bank of Japan’s new leadership to revitalise the economy. A look at the latest monetary aggregates underlines the challenges they face. … Monetary Indicators Monitor …
14th March 2013
The improvements in the headline indices from the government’s quarterly Business Outlook Survey and the latest monthly report on consumer confidence provide further evidence that Japan’s economy is returning to growth, but we knew that already. The …
13th March 2013
The slump in machinery orders in January illustrates the divergence between the improvement in sentiment in financial markets and what is actually happening on the ground. Of course, it is too soon to expect “Abenomics” to transform the incoming economic …
11th March 2013
After what proved to be only a brief pause, the slide in the yen and associated surge in the Nikkei have both resumed with a vengeance. A yen/dollar exchange rate of 100 and a further rally to 13,000 on the Nikkei are certainly plausible targets for the …
The Bank of Japan’s decision to leave policy on hold today was widely expected in the light of the leadership changes due later this month. Two Board members did propose tweaks to the framework which might find more favour once the new …
7th March 2013
The second estimate of Japan’s Q4 GDP, due on Friday (8th), is likely to show that the economy was not quite as weak as initially thought at the end of last year. In fact, there is a good chance that output increased fractionally. More timely data suggest …
6th March 2013
The year-on-year increase in labour cash earnings in January was flattered by late payments of winter bonuses. Underlying wage growth is still negative, meaning that households have been relying on falling prices to maintain spending. … Higher inflation …
5th March 2013
One of the policy changes that the new Bank of Japan Governor is likely to consider is a further clarification of the 2% inflation target. Mr Kuroda himself has reportedly suggested an explicit horizon of two years. As it happens, the consumption tax …
4th March 2013
