Japan Economics Update Credit risk lurking in the shadows Japanese banks have nearly doubled their lending to overseas non-bank financial intermediaries over the past decade. Some of this reflects purchases of collateralised loan obligations, most of which... 30th March 2023 · 3 mins read
Japan Economics Update Quantifying the risks from banks’ foreign claims With bond yields now dropping back again, the drag from unrealised losses on banks’ capital ratios should start to reverse. However, a sharp increase in losses on banks’ foreign loan portfolio has yet... 21st March 2023 · 4 mins read
Global Economics Update What next after Credit Suisse? While the Credit Suisse rescue might draw a line under that particular institution’s problems, it is clear that confidence in the financial sector overall is still extremely fragile. So regardless of... 20th March 2023 · 5 mins read
Japan Economics Update Wage-price disinflation spiral looms This year’s Shunto should result in the strongest negotiated pay hikes in decades. But the average Japanese employee will have little to rejoice in. Weaker corporate profits as well as a likely... 15th March 2023 · 3 mins read
Japan Economics Update BoJ will probably end Yield Curve Control in April The Bank of Japan didn’t make any policy changes at Governor Kuroda’s last meeting today but we expect incoming Governor Ueda to abandon Yield Curve Control in April. 10th March 2023 · 3 mins read
Japan Economics Update The impact of higher bond yields on public finances The higher bond yields that would follow abandonment of Yield Curve Control would make it more difficult to stabilise Japan’s public finances. But the long maturity of government debt means that the... 22nd February 2023 · 4 mins read
Japan Economics Update Shunto not a leading indicator of wage growth The conventional wisdom is that the annual spring wage negotiations (Shunto) are a bellwether for wage growth. In reality, the small number of employees covered by the talks and their bias towards... 30th January 2023 · 2 mins read
FX Markets Update Stronger yen still on the cards despite the BoJ’s obstinance While the Bank of Japan pushed back against expectations that it would end its Yield Curve Control (YCC) policy yesterday, we think it is only a matter of time before YCC bites the dust. That suggests... 19th January 2023 · 4 mins read
Japan Economics Update New Governor will ditch Yield Curve Control in April The BoJ kept policy settings unchanged today, but the increase in its medium-term inflation forecasts supports our view that Yield Curve Control will be abandoned once a new Governor takes over in... 18th January 2023 · 3 mins read
Japan Economics Update Exit Kuroda, exit YCC? The nomination of a less dovish candidate to succeed BoJ Governor Kuroda would probably signal that Yield Curve Control will soon be abandoned, though we would still expect the Bank to keep its short... 4th January 2023 · 6 mins read
Japan Economics Update The costs of the BoJ’s policy shift for investors The jump in bond yields and the further strengthening of the yen following the widening of the Bank of Japan’s tolerance band for 10-year JGB yields will lower the value of assets owned by Japanese... 21st December 2022 · 4 mins read
Asset Allocation Update Assessing the fall-out from the change to the BoJ’s YCC The surge in government bond yields around the world in response to today’s decision by the Bank of Japan to tweak its policy of Yield Curve Control highlights the risks to international markets posed... 20th December 2022 · 4 mins read
FX Markets Update BoJ’s YCC shift points to stronger yen The Bank of Japan’s unexpected decision to alter its yield curve control (YCC) policy has led to a surge in the yen today; we now expect the USD/JPY rate to drop further, reaching 125 by end-2023.... 20th December 2022 · 3 mins read
Japan Economics Update Bank of Japan Meeting (Dec. 2022) The Bank of Japan today tweaked its Yield Curve Control (YCC) settings by widening the tolerance band around its yield target but we don’t expect it to hike its short-term policy rate anytime soon. ... 20th December 2022 · 3 mins read
Japan Economics Update More flexible guidelines not enough for BoJ tightening A mooted adjustment to the joint statement between the Bank of Japan and the government has been widely interpreted as a step towards the withdrawal of ultra-loose policy. However, the policy... 19th December 2022 · 3 mins read
Japan Economics Update Food import price aftershocks to affect 2023 We expect inflation to remain above the Bank of Japan’s 2% target through the middle of next year despite government utility price caps and falling non-food inflation over that period. One reason is... 12th December 2022 · 3 mins read
