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Japan core CPI's will fall - Nomura

FXStreet (Barcelona) - Analysts at Nomura bank explained that they expect the core CPI to continue to fall.

Key Quotes:

"CPI data a mixed bag. Growth in the all-Japan core CPI in September came in above the consensus forecast, while growth in the core core CPI for the Tokyo ku-area in October was below the consensus forecast.

While we cannot assume that the nationwide figures for October will follow exactly the same pattern as the figures for the Tokyo ku-area, we nevertheless think the below-consensus October figure for Tokyo indicates that a sharp acceleration in nationwide inflation is unlikely."

"Forecasts for CPI data to be released this month: CPI data to be released at 8:30am on 27 November. We expect both all-Japan core CPI inflation for October and Tokyo ku-area core CPI inflation for November to remain in negative territory y-y."

"impact of TPP on Japanese CPI data. We expect the TPP to have a direct impact on Japan's CPI data as the abolition or reduction of tariffs reduces the prices of items that Japan has traditionally imported and these price reductions are then reflected in the CPI data. However, we think the negative impact on Japan's CPI data via this direct route is likely to be limited."

"Our view of the JGBi market: reasons why Japanese BEI has been left behind while BEI has risen in US and Europe. We see three reasons why Japan's BEI rate has been left behind while BEI has been rising in the US and Europe: (1) the poor performance of hedge funds; (2) the lack of appetite to buy among investors who are interested in JGBis; and (3) the high probability that the core CPI will fall through to the beginning of next year."

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