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We are raising our forecasts for 10-year Japanese government bond (JGB) yields to a peak of 1.75% later this year (from around 1.40% on Friday). This may not sound like much, but in the context of Japan and of our bullish forecasts for other major bond …
29th March 2010
The plan to raise the caps on postal savings deposits and life insurance is being interpreted by some as positive for Japanese government bonds (JGBs) and by others as a major threat to the banking system. In fact the direct effects, good or bad, are …
26th March 2010
February’s CPI data were not quite as bad as some of the subsequent commentary has suggested. Nationwide prices did at least rise month-on-month on all the main measures. In the meantime, household inflation expectations have remained positive, while …
Japan’s exports are predictably booming in year-on-year terms as the post-Lehmans slump in world trade drops out of the annual comparison. More revealingly, the volume of exports is heading for another large quarter-on-quarter gain in Q1, and the …
24th March 2010
The quarterly Flow of Funds data published by the Bank of Japan today shed a little more light on several hot topics, including households’ holdings of government securities and the huge difference between gross and net public debt. … Which matters more – …
23rd March 2010
In contrast to the position in many other major economies, notably the US, Japan’s broad-based recovery is helping firms of all sizes. Along with the relative strength of consumer confidence, this is another good reason to expect growth to remain firm for …
22nd March 2010
The strength at the end of last year has laid a firm foundation for 2010. With the latest survey evidence showing that momentum remains positive, we continue to expect GDP growth of around 3.0% this year, well above consensus. … 2010 looking good, but …
18th March 2010
The bare minimum the Bank of Japan could have got away with today was to extend the lifetime of the existing ¥10 trillion programme of three-month loans. In the event it has also doubled the size of the programme, to ¥20 trillion. However, with credit …
17th March 2010
The second successive monthly increase in consumer confidence in Japan suggests that household spending will remain strong in the current quarter even after last year's initial boost from government measures has faded. Encouragingly, sentiment towards the …
15th March 2010
The latest suggestions that official statisticians are engaged in some fiendish conspiracy to manipulate Japan’s GDP data are on very shaky ground. We continue to expect growth of around 3.0% in 2010, well above the consensus of 1.5-2.0%. But despite our …
Despite the small downward revision to growth in the fourth quarter, from 1.1% to 0.9% q/q, Japan has still recorded the biggest increase in GDP of any G7 economy since activity bottomed out in Q1 2009. … GDP (Q4, …
11th March 2010
The Bank of Japan is now widely expected to announce some additional monetary stimulus at its next Policy Board meeting (which concludes on Wednesday 17th). However, we suspect this will simply be an extension to the special fundssupplying operation …
10th March 2010
The recent contraction of bank lending is often cited as a risk to the economic recovery in Japan and to the prospects for investment in particular. However, the declines in bank lending are probably no more a sign of renewed economic weakness than the …
9th March 2010
The continued improvement in the main balances of Japan’s Economy Watchers Survey (EWS) in February is further evidence of a strong and increasingly broad-based recovery. We would pay less attention to the third successive year-on-year decline in bank …
8th March 2010
The government is due to announce its medium-term fiscal plans in June. Either this will mark the start of a long period of fiscal restraint, weakening the economy again and requiring further monetary loosening (we think this is the most likely outcome). …
The year-on-year slump in business spending in Q4 reported in today’s Ministry of Finance (MoF) survey is largely old news. Neither the year-on-year nor the quarter-on-quarter data justify speculation of a substantial revision to the second estimate of Q4 …
4th March 2010
Despite the scepticism of many, the recent declines in the unemployment rate in Japan are consistent with other evidence on the state of the labour market and the strong performance of the economy more generally. The turnaround in jobs and pay is …
3rd March 2010
Household spending dropped back in January, but the labour data were better than expected. Unfortunately, there are good reasons to question the sustainability of the sharp falls in unemployment. … Household Spending & Unemployment …
2nd March 2010
The 1.1% q/q increase reported in the preliminary GDP data for the fourth quarter of last year continues to be viewed with scepticism by many analysts. In some cases this may simply be an attempt to shift the blame for a poor forecast. At this stage there …
1st March 2010
The latest activity and survey data support our view that Japan’s GDP growth will continue to surprise the markets on the upside in the first half of the year, but the CPI data do nothing to ease concerns about the medium-term outlook. … Output, Housing, …
26th February 2010
Speculation about a temporary double-dip in Japan’s economy by the middle of this year is missing a much bigger threat. We still expect growth to surprise the markets on the upside for a few quarters more. But Japan could be back in outright recession in …
25th February 2010
The annual growth of Japan’s exports predictably soared in January due to favourable base effects. More revealingly, exports continued their gradual recovery in month-onmonth terms. Today’s upbeat survey of small and medium-sized enterprises (SMEs) in …
24th February 2010
Scientists have reportedly proved that bumblebees cannot fly because of their awful aerodynamics (the bees, not the experts). Fortunately, the insects just carry on regardless. Sometimes it feels the same way with Japan’s economy. … The bumblebee …
22nd February 2010
Japan should be able to avoid the sort of crisis that has hit Greece so hard. Government debt may be even larger in Japan, but the country is in a much stronger position in almost every other respect. … Is Japan the next …
The Bank of Japan meeting which concluded today was the non-event that most (ourselves included) had anticipated. Governor Shirakawa reiterated the Policy Board’s reluctance to adopt a more formal inflation target or to increase outright purchases of …
18th February 2010
The Bank of Japan’s Policy Board meeting, which concludes on Thursday, is likely to be a non-event. There is still a compelling case for further monetary stimulus and today’s parliamentary testimonies are a timely reminder of the tensions on this point …
16th February 2010
Japan recorded strong, broad-based growth in the final quarter of last year, laying a solid foundation for 2010. We continue to expect the strength of the recovery to surprise the markets for a few quarters more as pent-up investment spending kicks in. … …
15th February 2010
Recent market moves have supported our relatively positive views on the outlook both for Japanese equities and Japanese government bonds (JGBs). … Still positive on stocks and …
This report is only available as a PDF. Click to download. … Consumer Confidence (Jan.) …
12th February 2010
The huge amount of spare capacity left by the recession, and other headwinds, means that any pick-up in investment spending in Japan is unlikely to be spectacular. But this does not mean that investment will fail to recover at all. We expect both business …
10th February 2010
The Cabinet Office has announced a change in the seasonal adjustments that might reduce the GDP growth figure reported for the fourth quarter of 2009 (data due next Monday). However, any impact is likely to be small - perhaps a few tenths of a percentage …
8th February 2010
The renewed weakness of bank lending is largely due to lower demand for credit rather than a lack of supply. This is not all bad news – emergency bank borrowing by firms in distress is probably falling and other sources of finance are recovering, although …
This report is only available as a PDF. Click to download. … EWS & Bank Lending (Jan.) …
Our analysis suggests that Japan’s GDP grew by around 1.5% q/q in the fourth quarter of last year. Consensus forecasts are also coming in fairly strong, but our forecast is still top of the range. … Q4 GDP to beat …
Our analysis suggests that Japan’s GDP grew by around 1.5% q/q in the fourth quarter of last year (preliminary official data will be released on 15th February). This would be roughly equivalent to 6.0% at an annualised rate, faster even than the 5.7% …
4th February 2010
This report is only available as a PDF. Click to download. … Labour Cash Earnings (Dec.) …
2nd February 2010
This report is only available as a PDF. Click to download. … Activity strong but deflation fears grow …
1st February 2010
This report is only available as a PDF. Click to download. … External Trade (Dec.) …
27th January 2010
This report is only available as a PDF. Click to download. … Small Business Confidence (Jan.) …
26th January 2010
The Bank of Japan failed to make any new policy announcements today, disappointing some in the markets (ourselves included) who had hoped for at least a hint of further easing. However, the warning over the country’s sovereign credit rating from S&P …
This report is only available as a PDF. Click to download. … A better week in prospect for Japanese data …
25th January 2010
This report is only available as a PDF. Click to download. … More stimulus coming soon …
22nd January 2010
This report is only available as a PDF. Click to download. … Consumer Confidence (Dec.) …
19th January 2010
This report is only available as a PDF. Click to download. … What difference will Kan make? …
18th January 2010
This report is only available as a PDF. Click to download. … Machinery Orders (Nov.) …
14th January 2010
Despite the relative inactivity of the central bank, Japan’s broad monetary aggregates are picking up. The year-on-year decline in bank lending in December is probably not as worrying as it looks either. However, the survey evidence suggests that …
12th January 2010
This report is only available as a PDF. Click to download. … EWS & Bank Lending (Dec.) …
This report is only available as a PDF. Click to download. … Bright outlook for 2010 …
11th January 2010
We are upgrading our forecast for Japanese GDP growth in 2010 from 3.0% to 3.5%. This is well above the latest published consensus forecast of around 1.5%, as well as the projections from the likes of the IMF (1.7%) and the OECD (1.8%). However, having …
5th January 2010
The data released over the holiday period were mostly upbeat, with the early stabilisation in the labour market supporting consumer spending and external demand continuing to recover. The announcement of additional fiscal and monetary stimulus at the …
