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2025

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  • Daiwa's View - May price indices in Japan and US confirmed a situation roughly in line with optimal tariff theory

    Daiwa's View - May price indices in Japan and US confirmed a situation roughly in line with optimal tariff theory

    12 June 2025 406 KB PDF
    • While impact of tariffs on US CPI was smaller than expected, BOJ’s Corporate Goods Price Index revealed that Japanese firms are absorbing tariff costs through price reductions
    • The situation is roughly in line with optimal tariff theory, and, if this trend continues, negative impact of tariff policies on US economy may be much smaller than economists expected
    • Meanwhile, as this theory implies greater downward pressure on exporting nations than projected, it may constrain additional rate hikes by BOJ
  • Daiwa's View - BOJ meeting focal points: Interim assessment and QT strategy

    Daiwa's View - BOJ meeting focal points: Interim assessment and QT strategy

    11 June 2025 473 KB PDF
    • Jan-Mar GDP (2nd preliminary); Watch for downward pressure in next GDP reading
    • Ongoing tariff talks: Japan/US tariff agreement unlikely before G7 Summit?
    • BOJ to maintain wait-and-see stance at June meeting amid uncertainty
    • Focus on interim assessment: revision to slower QT pace due to market considerations? 
  • Daiwa's View - MOF mulling JGB buybacks

    Daiwa's View - MOF mulling JGB buybacks

    10 June 2025 679 KB PDF
    • MOF considers buying back some previously-issued JGBs in addition to new issuance reductions
    • Clarified stance on mobilizing all possible policies in conjunction with BOJ’s QT slowdown
  • Daiwa's View - The most notable event will be the 30-year JGB auction

    Daiwa's View - The most notable event will be the 30-year JGB auction

    4 June 2025 370 KB PDF
    • Yesterday’s 10-year JGB auction had a favorable outcome, a reassuring factor regarding investor demand in intermediate/long-term zones
    • That said, the most notable event will be tomorrow’s 30-year JGB auction
    • Focus will be on whether auction goes smoothly amid market segmentation, critical illiquidity, weaker demand from life insurers, and less attractive investment return for overseas investors (i.e., a tighter $ASW)
    • A 30-year JGB compound yield of 2.7% would become a barrier in terms of balance vs. UK gilts
  • Daiwa's Economic View - Tokyo CPI for May: Sticky inflation?

    Daiwa's Economic View - Tokyo CPI for May: Sticky inflation?

    30 May 2025 483 KB PDF
    • Progress passing on higher costs to prices for goods/services
    • With cost-push pressures easing, focus on how long passing on higher costs to prices will continue
    • Electricity/gas subsidies to place roughly 0.3% drag on CPI in Aug-Oct
    • Even though price decline from release of stockpiled rice limited, still see drag of about 0.2% on CPI
  • Daiwa's View - How far will superlong JGB yields fall?

    Daiwa's View - How far will superlong JGB yields fall?

    28 May 2025 865 KB PDF
    • MOF's cut to superlong issuance could drive down 30-year yield to 2.5-2.7%
    • Review of issuance midway through fiscal year unusual; likely game-changer for superlong JGB market
  • Daiwa's View - What lies ahead regarding a reduction to the consumption tax?: Impact on Japan's sovereign ratings

    Daiwa's View - What lies ahead regarding a reduction to the consumption tax?: Impact on Japan's sovereign ratings

    22 May 2025 333 KB PDF
    • If consumption tax were cut, downward pressure would likely be exerted on Japan’s sovereign ratings
    • Whether it would actually lead to downgrade depends on scale and period of tax cut; S&P would likely emphasize balance with fundamentals
    • Full-fledged debate expected from autumn until year-end; our main scenario is that a downgrade would be avoided
  • Daiwa's View - BOJ's Bond Market Group meetings (Day 1)

    Daiwa's View - BOJ's Bond Market Group meetings (Day 1)

    21 May 2025 641 KB PDF
    • JGB purchasing reduction plan through Mar 2026 likely to maintain current pace
    • Sense somewhat strong possibility of JGB purchases slowing to around Y200bn from Apr 2026
    • In order to proceed with “reduced JGB purchasing operations” while ensuring that market participants maintain predictability, must have broad-view discussions on “excess reserves to target over long term” (equivalent to appropriate balance sheet size)