Japan’s Q2 GDP beat expectations, with stronger business spending and net exports offsetting a drag from inventories.
Japan Q2 GDP (Preliminary)
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GDP SA (Q/Q): 0.3% (est 0.1%; prev 0.0%)
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GDP Annualised SA (Q/Q): 1.0% (est 0.4%; prev –0.2%)
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GDP Nominal SA (Q/Q): 1.3% (est 1.4%; prev 0.9%)
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GDP Deflator (Y/Y): 3.0% (est 3.2%; prev 3.3%)
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Private Consumption (Q/Q): 0.2% (est 0.1%; prev 0.1%)
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Business Spending (Q/Q): 1.3% (est 0.7%; prev 1.1%)
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Inventory Contribution to GDP: –0.3% (est –0.2%; prev 0.6%)
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Net Exports Contribution to GDP: 0.3% (est 0.1%; prev –0.8%)
This is the fifth consecutive quarter of GDP increase
- both consumption and capex have risen for those 5 straight quarters.
Both JGB futures and USD/JPY are dipping a little after the data:
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JGB futures dipping → Stronger-than-expected GDP, especially in business spending and exports, boosts expectations for additional Bank of Japan hikes … eventually!. That nudges yields higher and pushes bond futures lower.
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USD/JPY dipping → While the GDP beat is modest, it still points to a slightly firmer domestic economy, which can be yen-supportive at the margin. This looks to have prompted some traders to trim short-yen positions, leading to a small dip in USD/JPY.
In short: better GDP = less dovish BoJ bias = higher yields, stronger yen.
This article was written by Eamonn Sheridan at investinglive.com.
