Japan Economics Update Widening of tolerance band not off the table yet The Bank of Japan didn’t concede any ground to bond traders today but we still think there’s a good chance that it will widen the tolerance band around its 10-year yield target. 21st July 2022 · 3 mins read
Japan Economics Update Russian gas export ban would hold back recovery If Russia decided to end all exports of natural gas to Japan, we suspect that Japan’s GDP would fall by around 0.5%. However, the hit could be larger as there is now less scope to reduce energy usage... 4th July 2022 · 3 mins read
Japan Economics Update A reprieve for Yield Curve Control The Bank of Japan gave no ground at all to bond traders today as it left all its major policy settings unchanged. Governor Kuroda was resolute in claiming that Yield Curve Control has no limits in his... 17th June 2022 · 3 mins read
Global Markets Update BoJ to raise ceiling on 10-year yields The weakening in the yen to a 24-year low and a crack in the Bank of Japan’s ceiling on 10-year yields today is putting significant pressure on policymakers to respond. FX intervention is a... 13th June 2022 · 5 mins read
Japan Economics Update Are the demographic headwinds strengthening? A falling fertility rate and declining employment among retirement age workers pose downside risks to our long-term forecasts for Japan’s labour force and GDP growth. However, with the female... 7th June 2022 · 4 mins read
Japan Economics Update Weaker yen won’t provide a big boost to net exports With Japan’s terms of trade set to improve only modestly and interest rates differentials moving further against the yen, we expect the exchange rate to fall to 140 against the dollar by year-end. But... 19th May 2022 · 2 mins read
Japan Economics Update Large pot of pandemic savings to collect dust The hit to household incomes from higher inflation will be much smaller in Japan than elsewhere and consumers have plenty of pandemic forced savings to tap into to sustain spending. But we nonetheless... 11th May 2022 · 4 mins read
Japan Economics Update Weaker yen will help lift underlying inflation to 2% The pass-through of higher import costs resulting from the weaker yen and soaring energy prices will lift underlying inflation close to the BoJ’s 2% target by the end of the year. However, with wage... 4th May 2022 · 5 mins read
Japan Economics Update BoJ may yet widen its tolerance band The Bank of Japan resisted the temptation to widen its tolerance band for 10-year JGB yields today, but it did outline that it will from now on conduct unlimited fixed rate auctions every business day... 28th April 2022 · 3 mins read
Japan Economics Update BoJ to widen 10-year yield tolerance band further With US Treasury yields set to keep rising over the coming year, it will become even more difficult for the Bank of Japan to defend its target for 10-year JGB yields. While we don’t expect the Bank to... 26th April 2022 · 4 mins read
Japan Economics The yen’s depreciation has further to run We think the yen will drop even further as policy divergence widens. We now forecast USD/JPY to reach 140 by the end of this year, before dropping back as the Fed takes its foot off the gas in 2023... 22nd April 2022 · 4 mins read
Japan Economics Update Four questions on FX intervention With the yen falling to a 20-year low against the dollar, talk of foreign exchange market intervention is growing. While we think the bar for any intervention is high, this Update answers some key... 21st April 2022 · 4 mins read
Japan Economics Update Yen intervention may not work and benefits unclear The yen isn’t obviously undervalued so it isn’t clear whether attempts to weaken it would work. Most importantly, the Bank of Japan remains convinced that a weaker yen is beneficial for Japan’s... 6th April 2022 · 3 mins read
Japan Economics Update Cracks appearing in Yield Curve Control It hasn’t failed yet but the Bank of Japan’s need to return repeatedly this week to defend the ceiling of its yield target suggests that cracks are appearing in the structure of Yield Curve Control... 29th March 2022 · 4 mins read
Japan Economics Update BoJ won’t tighten even as inflation reaches 2% target The Bank of Japan kept policy settings unchanged today and signalled that it is more worried about the negative impact of higher commodity prices on activity than about inflation spiralling out of... 18th March 2022 · 3 mins read
Japan Economics Update Soaring energy prices unlikely to dent profits much The recent spike in energy prices will lift import prices in Japan by around 10%, but the increase would be twice as large if Russian energy exports were banned. Japan’s flagship manufacturing sectors... 9th March 2022 · 5 mins read
