Archives of “Empire of Japan” tag

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Japan GDP preliminary for Q2 -7.8% q/q (vs. expected -7.5%)

  
Analysis, Economy
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Japan GDP preliminary for Q2 2020, capturing the impact of the COVID-19 outbreak and response

GDP sa -7.8% q/q  , a miss on already ugly low expectations

  • expected -7.5%, prior -0.6%

GDP annualised sa -27.8% q/q (ps when you see screaming headlines that Japan’s economy has shrunken 30% …. it hasn’t, but this is what the economically illiterate are referring to – you’ll know better)

  • expected -26.9%, prior -2.2%

GDP nominal -7.4% q/q

  • expected -6.5%, prior -0.5%

GDP deflator (an inflation indication) %

  • expected 1.7%, prior 0.9%

Private consumption -8.2%

  • expected -6.9% q/q, prior -0.8%

Business spending -1.5% … if there is some not quite so bad news to take away from the data release this smaller than expected drop in capex is it

  • expected -4.0%, prior -1.7%
This is the 3rd consecutive quarter of GDP contraction for Japan.
Japan is a net exporters, the decline in demand offshore has taken a heavy toll on shipments – Q2 exports fell at their fastest since Q1 2009 (GFC influence) and external demand has subtracted the biggest hit from GDP since 1980 (based on comparable data).
ps. yen is doing little on the data release.

Tokyo reportedly finds 266 new coronavirus cases in latest update today

  
  Analysis
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NHK reports on the latest virus situation in the Japanese capital

That just reaffirms the narrative that the low count from yesterday was largely skewed by the ‘weekend effect’ and the fact that there was a long weekend in Japan.

The virus trajectory in Japan has not been encouraging since the start of the month, with the spread of infections already surpassing that seen during the initial outbreak. As of yesterday, Japan has recorded over 8,000 active cases – the most since early May.

Japan
For now, the government is still maintaining that the situation does not call for any extraordinary measures to curb the spread of infections but let’s see how long they can keep at this with the Olympics next year a key focus as well.

UK 2-year bond yields briefly fall below that of Japan’s for the first time ever

  
  Analysis
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The Japanification of the gilt market continues

UK Japan

Japan is pretty much the benchmark for low-to-no yields in the global bond market and when another country reaches that point, it sort of rings an alarm bell to investors that there isn’t much attractiveness/value in said yields anymore.
UK long-term yields fell below their Japanese counterparts at the end of last month but now we’re seeing the front-end of the curve follow suit as well.
The rally in gilts could either be suggestive that investors are fine with being more risk averse or that those buying are pretty much stuck due to regulatory constraints.
But whatever the case is, don’t expect value investors to be searching for scrumptious returns in the UK any time soon. In turn, that may be another reason to add to the list of headwinds for the pound and the UK economy in general.
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