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Now that the markets know the US Fed’s plans for additional QE, and these are presumably largely priced into the currency markets, any additional easing from the Bank of Japan will have a greater chance of weakening the yen. For this and other reasons, …
8th November 2010
The G20 Summit in Korea next week (11th – 12th) will be overshadowed by the fall-out from “currency wars”, hampering any attempt at the improved coordination of policies necessary to help rebalance the global economy. In particular, the US will find it …
5th November 2010
The rescheduling of the Bank of Japan’s next Policy Board meeting to Thursday and Friday this week was surely designed to provide an early opportunity to assess any market fall-out from the US Fed’s announcement tomorrow. We suspect that, other things …
2nd November 2010
The Bank of Japan’s decision to bring forward its November Policy Board meeting to the day after Wednesday’s FOMC raises the intriguing possibility that the Bank intends to respond to any additional quantitative easing in the US with further QE of its …
1st November 2010
Japan's manufacturing output fell in the third quarter, reflecting both weaker exports and the expiry of government car subsidies at home. The outlook for Q4 is grim. However, other parts of the economy are doing a little better, with household spending …
29th October 2010
The Bank of Japan’s decision to bring forward its November Policy Board meeting to the day after next Wednesday’s FOMC raises the intriguing possibility that the Bank intends to respond to any additional quantitative easing in the US with further QE of …
28th October 2010
Smaller Japanese businesses report that conditions are worsening, particularly in the manufacturing sector, which presumably reflects the more challenging global economic environment and the strength of the yen. Nonetheless, the mood is still less …
27th October 2010
The Bank of Japan’s Policy Board meets on Thursday and will almost certainly forecast that inflation will remain well below the new informal target of 1% until at least 2012. This does not necessarily mean, as many will assume, that there are no …
26th October 2010
Japan’s exports were broadly unchanged in the third quarter, marking an end to the string of large positive contributions to GDP growth from net trade. For now at least, consumer spending and investment appear to be picking up the slack, but the pressure …
25th October 2010
The surge in the yen and recent weakness in the export-oriented manufacturing sector have raised concerns that Japan may already be sliding back into recession. In contrast, our view is that the near-term outlook is brighter than generally appreciated, …
The expenditure breakdown released alongside the August activity index and the detail of the Bank of Japan’s Senior Loan Officer Survey both suggest that the economic recovery is finally spreading to investment. … Activity Index (Aug) & Senior Loan …
21st October 2010
The smaller-than-expected decline in the tertiary activity index suggests that the recovery in Japan’s service sector gathered pace in the third quarter despite the strength of the yen. … Tertiary Activity …
18th October 2010
The seemingly relentless appreciation of the yen against the dollar has not caused quite the degree of panic in Japan’s equity markets that might have been anticipated. In part this is because the yen is still a touch weaker now in trade-weighted terms …
There are some valid concerns over the outlook for the next few quarters, but the surge in machinery orders suggests that the long-awaited rebound in Japanese investment has at least begun. This should be an important support to GDP growth as the boosts …
13th October 2010
Japanese consumer confidence eroded further in September, although this is no surprise following the falls in other sentiment indicators. Confidence remains well above its 2009 trough and, for now at least, is still higher than at the start of 2010. … …
12th October 2010
China may have bought an unusually large quantity of Japanese bonds over the summer, but its purchases were too small to explain the strength of the yen or falls in government bond yields. In any case, the latest data show significant net sales by China …
11th October 2010
Current economic conditions worsened sharply last month, according to the latest Economy Watchers Survey (EWS). An apparent improvement in the outlook provided the thinnest of silver linings. Nonetheless, there are good reasons to think that the pessimism …
8th October 2010
Today’s announcements of a new asset purchase scheme by the Bank of Japan (BoJ) and its symbolic lowering of the key policy rate are not game changers and the tepid market response is probably justified. But they do at least show that the BoJ is willing …
5th October 2010
August's headline data on labour cash earnings were weaker than expected but the breakdown is reassuring and the underlying trends in employment income are continuing to improve. Meanwhile, the Bank of Japan is reportedly considering a range of options …
4th October 2010
This week's focus will be on the Bank of Japan's Policy Board meeting, which concludes on Tuesday. Hopes of further monetary easing are high, but we see two risks. The first is simply that the Bank does nothing. preferring to wait until the end of the …
This week's wave of Japanese data has ended on a more positive note, with the unemployment rate falling in August for the second successive month, household spending firm, and the CPI no worse than expected. … Unemployment, Spending & CPI …
1st October 2010
The third successive monthly fall in industrial production in August was a nasty surprise and there may be worse to come as auto firms slash output following the expiry of a government scheme to boost car sales. This has also overshadowed last month's …
30th September 2010
The recent currency intervention by the Bank of Japan was almost certainly not the major shift in monetary policy that many seem to assume. The move was ordered by the Ministry of Finance and the likelihood that it has not yet been fully sterilised may …
29th September 2010
The Bank of Japan's quarterly Tankan confirmed that business conditions were still improving in the third quarter but will be tougher in the fourth. … Tankan Survey …
Smaller businesses in Japan took a more downbeat view of the outlook in September as yen strength, domestic political uncertainties, and the spat with China all had an impact. But the survey does not indicate that the upswing is about to grind to a halt. …
28th September 2010
Japan's exports are still holding up rather better in volume than in value terms, but there is no doubt that the strength of the yen is hurting. What's more, the export and import data combined suggest that net trade may actually subtract from GDP growth …
27th September 2010
The coming week is packed with key data, the bulk of which should be relatively upbeat. The markets will focus on the Tankan, but the monthly business surveys for September should also be reassuring. Retail sales, industrial output and housing starts …
July’s all industry activity index suggests that Japan’s economic recovery picked up again in the third quarter after wobbling in the second quarter. In particular, the expenditure breakdown (which is usually over-looked) shows that consumer spending rose …
22nd September 2010
There has been much fruitless speculation over whether the Japanese authorities want the yen to fall back sharply or just want to see it stabilise. We do not believe there is any such “grand plan”. Indeed, the aim of Wednesday’s intervention may have been …
20th September 2010
Japan’s economy grew more than initially thought in the second quarter, although conditions will remain tough for some time given the ongoing global slowdown. Business and consumer confidence have weakened in recent weeks. However, the labour market is …
13th September 2010
The revised data for Q2 GDP, released on Friday, confirmed that last quarter’s economic performance was not nearly as poor as first appeared. There are clouds on the horizon, but the evidence so far suggests that the economy has picked up pace since the …
The pick-up in Japanese consumer sentiment appears to have run out of steam. On the bright side, confidence is not too far short of pre-crisis levels, in contrast to the subdued state of sentiment seen in many other major economies. … Consumer Confidence …
9th September 2010
Today's batch of data showed that machine orders were strong in July but bank credit figures for August and the current conditions index of last month's Economy Watchers Survey (EWS) were disappointing. The EWS outlook measure fell sharply too. … …
8th September 2010
The Bank of Japan (BoJ) left rates unchanged today but the accompanying policy statement was more cautious on the outlook. This is a positive step but the BoJ will probably stay reluctant to implement the further quantitative easing measures which are …
7th September 2010
The Bank of Japan’s recent decision to loosen monetary policy further has had little impact on Japan’s asset markets and the yen, which have continued to take their cue from developments overseas. We expect this to remain the case. But while our year-end …
6th September 2010
The last of Japan's key activity data for July were pretty good, with industrial production, retail sales and housing starts all better than the consensus (as was last week's unemployment report). The slump in the manufacturing PMI in August illustrates …
31st August 2010
The Bank of Japan's decision to loosen monetary policy further at an emergency meeting today simply brought forward the move that was widely expected to take place early next month. The economic impact will be negligible and any impact on the yen will be …
Japanese government officials have stepped up their expressions of concern about the strength of the yen, but they appear to favour additional fiscal measures and further easing from the Bank of Japan rather than physical intervention in the FX markets. …
30th August 2010
The welcome fall in the unemployment rate in July starts to bring it back in line with the improving trends in other indicators of the health of Japan's labour market. Household spending fell back slightly month-on-month after a big jump in June, while …
27th August 2010
There is little that the Japanese government can do to engineer a fundamental shift in sentiment towards the yen, which is being driven by developments elsewhere. A change in rhetoric from the Bank of Japan might at least make the markets pause for …
25th August 2010
Japan's July trade data confirm that the surge in the yen is hurting export revenues. Nonetheless, export volumes still picked up again at the start of the third quarter. Imports have also slowed sharply after their unexpected strength in Q2 had played a …
Looking on the bright side, the fact that GDP was unexpectedly weak in the second quarter should at least have prepared the way for growth to pick up again in the second half of the year. But the increased uncertainty is clearly unwelcome and the rising …
23rd August 2010
The disappointing data for the second quarter have prompted us to revise down our forecast for Japan’s GDP growth in 2010. At the same time we are nudging our 2011 forecast higher, and our numbers for both years are probably above-consensus (certainly so …
19th August 2010
Japan's economy barely grew at all in the second quarter as domestic demand fell and rising imports offset most of the smaller boost from slowing exports. The markets are still focused on the yen, but it is worth watching fiscal developments too: today's …
16th August 2010
Fears about the impact the rising yen will have on exporters are overdone. Deflation has ensured that Japan remains internationally competitive. The bigger threat is slowing demand in overseas markets. … How uncompetitive is the …
A small fall in consumer confidence last month still leaves the headline measure at a high level, while the survey detail provides further evidence that the labour market is not as weak as the unemployment figures suggest. This should offset some of the …
12th August 2010
The Bank of Japan made only small tweaks to its policy statement today and, contrary to some expectations, introduced no policy shifts in response to the rise of the yen. Its ability to make a lasting difference to the exchange rate is in any case …
10th August 2010
The yen has continued to strengthen, while the economic outlook seems to be weakening. But the Bank of Japan is probably not in a position to do much in response on either front at its meeting this week. However, with deflationary pressure still very …
9th August 2010
The current conditions index of the Economy Watchers Survey (EWS) climbed back to a multi-year high in July. The survey raises some questions about the outlook, but, overall, its high level should be reassurance that momentum remains strong. … Bank Credit …
The rush of data at the end of July has added to doubts about the durability of the economic recovery, with sentiment in the equity market not helped either by further strength in the yen. However, growth appears to be slowing to a more sustainable rate, …
2nd August 2010
