- BoJ’s effective control over JGB yields at 0.5% helped propel stocks to new highs in July. JGB yields are climbing after the YCC shift on Friday, but Japanese real yields remain deeply negative. The yen remains under pressure: rising real yields in the US may lead to further selling (pages 2 – 4)
- Nationwide, core inflation showed some signs of topping out in June (page 5 – 8)
- Lead indicators for inflation (PPI, import prices) are rolling over quickly (page 12)
- But Tokyo core CPI hit new highs in July (pages 9 – 10)
- Higher inflation has squeezed real incomes (page 27)
- Surveys (PMIs, Economy Watchers etc) point to slight moderation in growth (pages 13 – 15)
- But Tankan survey stronger in Q2, with significant improvement forecast for Q3 (pages 16 – 17)
- Strong GDP/domestic demand in Q1 (pages 21 –25)
- Consumer confidence firmed in July again (page 26)
- Budget deficit is narrowing, with public sector debt stabilising, albeit at alarming levels (page 30)
- Non-manufacturing corporate sector debt rises to new highs (pages 32 – 34)
- But profits and net book value for non-manufacturing rises too (pages 35 – 37)
- Employment growth has stalled. Nominal wage growth has slowed too. But Japan remains close to full employment (pages 38 – 46)
- Trade deficit narrows (pages 47 – 55)
- Perhaps surprisingly, inflows into equities fall. Unsurprisingly, inflows into JGBs rise (page 56)
- Construction orders hit new highs (page 60)
- BoJ holdings of JGBs surpass 100% of GDP (page 64)
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