As expected, the Bank of Japan (BOJ) raised interest rates 25bp to 1.25% at its September meeting. The decision reflects the resilience of the Japanese economy, and the ongoing inflation risk emanating from the conflict in the Middle East. However, life is likely to become more complicated for the BOJ. Specifically, I expect economic growth … Continue reading BOJ: Deflation Legacy = Continued Caution
Tag: inflation
Bond Markets: Mr. Warsh’s Education
Since March, when the US Congress began considering Kevin Warsh's appointment as Chairman of the Federal Reserve, bond yields have surged 75 basis points. Initially, financial markets were concerned about Mr. Warsh's ability to resist inevitable pressure from POTUS47. In particular, would he take a dovish approach to controlling above-target inflation. These fears intensified after … Continue reading Bond Markets: Mr. Warsh’s Education
Can the United Kingdom Be Fixed?
Recent elections in Hungary and the Netherlands, along with Trump 2.0's flagging support, led some to speculate that world-wide political populism may be peaking. However, these hopes were dashed by the UK local election results in which Reform UK was the big winner, and nationalist parties took control in Scotland, Wales, and Northern Ireland. In … Continue reading Can the United Kingdom Be Fixed?
Japan: Resilient, But For How Long?
Asia has been identified correctly as the most vulnerable region to both the Iran War and Trump 2.0 tariffs. Overall, recent financial market performance has reflected these risks (next Chart). Indeed, equities in most Asian countries have lagged global and US indices, and most regional currencies have weakened. Perhaps surprisingly, however, Japan has been an … Continue reading Japan: Resilient, But For How Long?