Japan: Overall disappointing data will increase expectations of a BoJ move - BBH
|Research Team at BBH, notes that the Japan reported May unemployment, household spending, and national CPI overnight.
Key Quotes
“It also reported June Tokyo CPI. National CPI came in at -0.4% y/y in May vs. -0.5% in April. However, this may be reversed since Tokyo CPI came in at -0.5% y/y vs. -0.4% in May. Unemployment was steady at 3.2%, while the jobs-to-applicant ratio rose to 1.36. Household spending was steady at -1.1% y/y in May. BOJ next meets July 29, and overall disappointing data of late will increase expectations of a move then.
The Q2 Tankan report came out a bit later. Sentiment among the large manufacturer was flat at 6 and is expected to remain at 6 in September. Large non-manufacturer sentiment slipped to 19 from 22 and is expected to ease to 17 in September. Sentiment among smaller producers and service providers deteriorated. One bright spot was capex plans, which large companies are expected to boost by 6.2% after -0.9% in the March survey for Q1. We are somewhat suspicious, as the June manufacturing PMI (48.1 in June vs. 47.7 in May) is the fourth consecutive month in contracting territory.
Falling yields seem to be offsetting the rise in equities as a driver for the yen, which is the strongest currency today, gaining 0.6% against the dollar. The greenback was turned lower after making a marginal new high for the week in Asia near JPY103.40. A break and close below yesterday's low (~JPY102.35) would be bearish technical development.”
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