Overview
- Tuesday's government wage report showed real pay rose 2.4% year‑on‑year in July and nominal earnings jumped 4.7%, with base salaries up 4.1% and special one‑off payments also lifting the figures.
- Cabinet Office revisions released the same day raised Q2 GDP to an annualised 1.4% from 1.1%, a modest upgrade that further clears the data bar for policy tightening.
- Swap markets now imply roughly 97–98% odds of a 25 basis‑point BOJ increase at the Sept. 17–18 meeting and have pushed investors to unwind yen funding trades.
- The yen strengthened sharply to about ¥153 per dollar and Japanese government bond yields rose as traders repositioned, putting pressure on carry‑trade positions tied to large cross‑border yen borrowing.
- People familiar with BOJ thinking and market analysts say the bank is likely to deliver a conventional 25bp hike rather than a 50bp shock and that forward guidance about further gradual moves will be the next key signal for markets.