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Bank of Japan Governor

Bank of Japan Governor

Rate Hikes Depend on Strong Economic Expectations, Positive Developments in Wages and Inflation

In statements made on Monday morning, Bank of Japan (BoJ) Governor Kazuo Ueda emphasized
that the Japanese economy is showing signs of moderate recovery despite some signs of weakness in specific sectors.
Ueda stressed that the central bank will gradually raise interest rates once strong economic expectations are met,
focusing on supporting sustainable growth and moderate inflation.

 

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Ueda clarified that the BoJ is carefully monitoring various risks that may affect economic expectations,
including developments in the U.S. economy.
He noted that rising spending is gradually supporting a positive cycle between wages and inflation,
with income levels increasing in both corporate and household sectors.

 

Ueda highlighted the importance of observing upcoming wage negotiations,
pointing out that sustainable wage increases will play a crucial role in achieving the bank’s inflation targets.
He also urged companies to pass on higher labor costs by raising prices for goods and services,
stating that such measures are essential for boosting productivity and achieving sustainable increases in real wages.

 

The governor discussed challenges facing the Japanese economy,
including slowing growth in China and developments in U.S. economic policy under President-elect Donald Trump.
He underscored the importance of monitoring volatile markets and their impact on Japan’s economy and domestic prices.

 

Ueda stated that core inflation is expected to rise moderately, with increasing prospects for a soft economic landing.
However, he reiterated the BoJ’s commitment to supporting economic activity
while gradually easing its accommodative monetary policies when conditions allow.

These statements come at a time when expectations for gradual rate hikes in Japan are growing,
amid rising inflationary pressures and anticipated wage increases.
With a focus on sustainable economic growth,
the BoJ aims to achieve internal economic stability while taking into account major global shifts.

 

 

 

Bank of Japan Governor

 

Japan’s Export Growth Boosts Economic Recovery Hopes

Japan’s Export Growth Boosts Economic Recovery Hopes

Japan’s exports rose by 5.4% in June compared to the previous year,
driven by strong demand for chip-making equipment and non-ferrous metals.
This marks the seventh consecutive month of export growth,
supporting optimism for an economic recovery in the second quarter.

 

 

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Trade Surplus 

Expert Opinions

Impact of a Weaker Yen

 

 

 

 

 

 

Trade Surplus 

Despite expectations for a 9.6% increase in imports, the actual rise was only 3.2%.
This discrepancy led to a trade surplus of 224 billion yen ($1.4 billion) in June,
compared to a deficit of 1.22 trillion yen in May.

 

 

Expert Opinions 

Yutaro Suzuki, an economist at Daiwa Securities, anticipates GDP growth in the second quarter but cautions that it will not be robust due to weak domestic demand and consumption.

 

 

 

 

 

 

 

Impact of a Weaker Yen 

The yen’s weakness, averaging 156.64 against the dollar in June, helped boost the value of export shipments. However, it also raises concerns about inflation in energy, food, and materials.

 

Geographic Performance of Exports Exports to the United States increased by 11%, though this growth rate was slower compared to the previous month. Similarly, exports to China slowed to 7.2%, and shipments to the European Union fell by 13.4%.

 

Future Challenges China’s unexpected economic slowdown adds pressure on policymakers in Japan to increase support. Meanwhile, the Bank of Japan is monitoring the impact of a weaker yen on the economy ahead of its upcoming monetary policy decision, with expectations for reduced bond purchases and potential interest rate hikes.

 

Economic Outlook Japan’s economy needs strong export performance to achieve recovery in the second quarter, especially given weak consumer spending. With ongoing government interventions to support the yen, the future of Japan’s economy remains closely tied to both domestic and international market developments.

 

 

 

Japan’s Export Growth Boosts Economic Recovery Hopes

Oil Prices Rise Following Stabilisation of US Production Volume

Oil Prices Rise Following Stabilisation of US Production Volume: Forecasts indicating the stability of US oil production until 2025 led to an increase in oil prices on Wednesday, easing concerns of oversupply

 

Topics

Rise in Oil Prices Following Stabilisation of US Production Volume

What Federal Reserve Members Might Offer to Markets Today

Japanese Wage Growth May Prompt the Bank of Japan to End Negative Interest Rates

 

 

 

Rise in Oil Prices Following Stabilisation of US Production Volume

 

Forecasts indicating the stability of US oil production until 2025 led to an increase in oil prices on Wednesday, easing concerns about oversupply.
Brent crude futures rose by 38 cents, or 0.5%, to $78.97 a barrel at 0013 GMT,
while the price of West Texas Intermediate (WTI) crude rose by 41 cents, or 0.6%, to $73.72.
Both crudes had risen slightly on Monday. The US Energy Information Administration, in its short-term energy outlook on Tuesday,
suggested that US domestic oil production would not exceed the record set in December 2023,
which was over 13.3 million barrels per day, until February 2025.

 

What Federal Reserve Members Might Offer to Markets Today

 

Attention is focused today on statements from Federal Reserve members,
who will speak at the Brookings Institution in Washington, D.C.,
regarding the path of easing and exiting the current monetary tightening.
Statements regarding the potential effects of the latest labour market data,
which showed clear strength that may compel the Federal Reserve to cut interest rates later this year, are also anticipated.
The Fed has signalled three rate cuts this year,
and hints from members today and further tightening may subsequently bolster the rise of the US dollar index,
which has been performing well since the beginning of the year, while we may see declines in the price of gold.

 

 

 

Japanese Wage Growth May Prompt the Bank of Japan to End Negative Interest Rates

 

Data released by the Ministry of Labor on Tuesday showed a 1% increase in nominal wages for December,
contrary to analysts’ expectations of a potential increase of 1.4%. This increase follows a 0.5% rise in winter bonuses.
The Bank of Japan has emphasized in previous meetings that wage growth should accompany the increasing demand-driven wage growth.
The latest data reinforces the step that the Bank of Japan may take during its upcoming May meeting to exit from its easing policy,
where it currently maintains a negative interest rate of -0.10%, marking the first time since 2007 that the Bank of Japan would raise interest rates.

 

Oil Prices Rise Following Stabilization of US Production Volume

The Chinese industry is suddenly shrinking in September  and Nasdaq declines for the fourth session in a row

The Chinese industry is suddenly shrinking in September  and Nasdaq declines for the fourth session in a row

The Chinese industry is suddenly shrinking in September  and Nasdaq declines for the fourth session in a row :We are closing in on the September trading process, which has seen a lot of confusion, especially because of the Evergrande crisis that has affected stock markets over the past and current week. 

On the commodity market, after oil had recorded its highest levels in almost three years,

it fell again after the announcement by the Energy Information Administration of a significant and unexpected increase in oil inventories.

Evest follows all details in the following report:

 

topics:

Oil continues to fall due to increased inventories

A loss in Japan and gains in China

The Chinese industry is suddenly shrinking in September

The Chinese Caixin improved slightly in September

Japanese industry was significantly weaker in August

Nasdaq completes the fourth day in a losing streak

Adjusted UK GDP growth upwards for the second quarter

Oil continues to fall due to increased inventories

Oil began to show new signs of declining, as it continued to fall for the second session in a row following the announcement of a significant increase in US inventories.

The cost of Brent crude futures for November on the London Stock Exchange ICE Futures is $78.25 per barrel,

$0.5٪ lower than the closing price of the previous session. 

The price of WTI crude futures for November in electronic trading on the New York Mercantile Exchange (NMX) was $74.75 per barrel,

0.11% below the level when the market closed on September 29.

According to the Department of Energy, US commercial oil reserves increased last week by 4.58 million barrels to 418.54 million barrels. 

The American Petroleum Institute (API) estimated that there is a lower rise of 4.1 million barrels.

Experts interviewed by Bloomberg expected inventories to decline by 2.15 million barrels.

Meanwhile, reserves at Cushing Station, where traded oil is stored on the NYMEX stock exchange,

increased by 200 thousand barrels, while API recorded a jump in reserves by 359 thousand barrels.

Last week’s growth in United States gasoline inventories amounted to 193 thousand barrels,

while experts expected an increase of 1.5 million barrels.

Distillate inventories rose by 384 thousand barrels (a decrease of 1.4 million barrels was expected).

The oil market is being pressured by the marked strengthening of the dollar,

with the ICE dollar index jumping to its highest level in about a year on Wednesday and losing about 0.1% on Thursday.

A loss in Japan and gains in China

Stock indices in the Asia-Pacific region show multi-directional dynamics on Thursday: The Nikkei 225 index declined, and the Chinese CSI 300 index rose.

While the US S&P 500 index’s futures are rising by 0.52%. 0.43%.

China had a key role, with the worrying state of the domestic economy,

owing to energy problems and high raw material costs affecting industrial production.

In the meantime, the path of the global economy is worrying as it is affected by the pandemic, causing investors to be cautious.

With regard to the overall situation in Asia, industrial production fell by 3.2% in August, while retail sales declined for the first time in six months,

unlike the manufacturing sector, which improved in September.

In Japan, a few hours after Fumio Kishida was elected as the leader of the ruling Liberal Democratic Party (LDP) and thus prime minister

, the Nikkei index showed marginal losses of 0.31% at 2,9452.66 points.

Hong Kong’s Hang Seng index fell by 0.43% to 24,560 points, unlike the Shanghai Composite and Shenzhen Component indices,

which recorded a 1.81% gain at 14333.84 points.

The Kospi index rose by 0.28% to 3068.82 points, and the S & P/ASX 200 index in Australia rose by 1.88% to 29452.66 points.

The Chinese industry is suddenly shrinking in September

According to official figures, the gloomy mood suddenly took over the Chinese industry in September.

The PMI in the manufacturing sector fell to 49.6 (August: 50.1),

according to data from the National Statistics Agency and the China Federation of Logistics and Purchasing (CFLP). 

This is the first time since February 2020 that the index fell below the important 50 mark.

The Wall Street Journal consulted economists’ expectations at 50.1 points.

The Chinese Caixin improved slightly in September

In the Chinese industry, activity recovered in September.

The Purchasing Manager’s Index (PMI) in the manufacturing sector set by Caixin Media Co and Research House Markit rose to 50.0 (August: 49.2) points.

The index is based on a survey of about 400 companies, with greater attention to small, privately-owned companies.

Japanese industry was significantly weaker in August

The Japanese industry suffered a major setback last month.

According to the Government, production fell by 3.2 percent compared to the previous month and is therefore much higher than expected. 

Unanimously, economists predicted a rate of -0.5 percent.

The main reason for the significant decline is the shortage of chips in the automotive industry.

 

Nasdaq completes the fourth day in a losing streak

US stock indices ended Wednesday without a single dynamic, with the Nasdaq Composite falling for the fourth straight day, while the Dow Jones Industrial Index and Standard & Poor’s 500 rose.

The Chairman of the Federal Reserve Board, Jerome Powell,

said that the growing growth in consumer prices in the United States was associated with the recovery of economic activity after the Covid- 19 pandemic,

and did not mean that such an inflationary system would continue in the future

. He also reiterated that the Fed would raise the benchmark interest rate if “the significant increase in inflation causes serious concerns”.

Investors remain concerned about the rising debt limit.

Republicans in the Senate stopped another attempt by Democrats to raise the national debt limit,

leaving them with the need to develop a new initiative to avoid default. 

In the meantime, Janet Yellen, the US Treasury chief, warned earlier that her department could run out funds by October 18,

if Congress did not raise the borrowing cap.

Adjusted UK GDP growth upwards for the second quarter

The British economy grew in the second quarter of 2021 faster than initially expected. 

GDP increased by 5.5 (temporarily: 4.8 percent compared to the previous quarter,

as announced by the Statistics Agency in a second publication. 

The economists who surveyed the Dow Jones Newswires had predicted a confirmation of the initial figure.