Overview
- Japan’s Cabinet Office raised its Q2 GDP estimate on Tuesday to 0.4% quarter‑on‑quarter and July real wages rose 2.4% year‑on‑year, removing a major obstacle to further Bank of Japan tightening.
- Swap markets now price about a 98% chance of a 25 basis‑point BOJ hike to 1.25% at the Sept. 17–18 meeting, and analysts and insiders say the bank prefers a conventional 25bp step rather than a disruptive 50bp move.
- The yen rallied to near seven‑month highs against the dollar as traders trimmed carry trades and positioned for higher Japanese rates, a move that could pressure exporters and global bond markets.
- In Australia RBA leaders Sarah Hunter and Andrew Hauser have publicly signalled a willingness to raise rates again even though NAB’s August business survey showed conditions at a six‑year low and profitability plunged.
- Higher oil prices from renewed Middle East hostilities are lifting inflation risks worldwide and are being priced into swaps and futures, which is increasing the odds of further central‑bank tightening and weighing on households, borrowers and rate‑sensitive assets.