S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
Brown Brothers Harriman’s (BBH) Elias Haddad reports USD/JPY is consolidating around 162.00 after touching a 40‑year high near 162.84. Japan’s May wage data softened, and underlying Bank of Japan (BoJ) Consumer Price Index (CPI) indicators eased further below 2%, suggesting limited inflation pressure. Haddad concludes the bar for a hawkish BoJ repricing is high, which should cap Japanese Yen relief rallies despite current rate expectations.
JPY relief rallies seen as limited
“USD/JPY is consolidating around 162.00 after surging to a 40-year high at 162.84 last week. 30-year JGB yields dropped as much as 10bps to 4.00% on solid buying interest from investors. The 30-year bond sale’s average bid-to-cover ratio was 4.55 vs. 2.94 in June, the highest since May 2019.”
“Japan’s May labor cash earning data was soft due to calendar effect. Total nominal wage growth slowed more than expected to 3.2% y/y (consensus: 3.4%) vs. 3.6% in April. The less volatile scheduled pay growth for full-time workers cooled to a five-month low of 2.4% y/y vs. 2.5% in April.”
“Overall, Japan wage growth is not a major source of inflation pressure given annual total factor productivity growth of about 1%. Indeed, most of the BoJ’s underlying CPI indicators eased further below 2% in May.”
“The bar for a hawkish BoJ repricing is high, limiting JPY relief rallies. The swaps curve price in nearly 50bps of hikes to 1.50% in the next twelve months, which looks broadly appropriate.”
