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Japan: Economic expansion remains intact - BBH

Analysts at BBH explain that Japan’s economic expansion remains intact and October industrial production is expected to bounce back from September's softer report, but capex and exports remain key.  

Key Quotes

“Consumption remains poor, despite a strong labor market, where unemployment is expected to remain unchanged at 2.8%.  Overall household consumption is expected to have contracted in the 12-months through October, the same as in September.  This broad measure of Japanese consumption has not risen in a calendar year since 2013.   At the end of the week, Japan report October CPI figures.  The headline is expected to slow to 0.2% from 0.7% year-over-year.  This is largely an issue of the base effect.  The BOJ targeted measure, which excludes fresh food prices, may tick up to 0.8% from 0.7%.  But this increase is a function of the gains in energy prices.  Excluding fresh food and energy, CPI may have remained steady at 0.2%.”  

“BOJ:  Following the MOF's decision to cut the initial target issuance of 40-year bonds, after having previously cut the amount 30-year bonds it planned to issue, the BOJ announced the reduction of the number of long bonds (25 year-plus) by JPY10 bln to JPY90 bln.  The curve at the long-end steepened as a result.”

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