They need to hike but it still won’t be enough. https://t.co/IeXTQWzgd1
— Not Another Quant (@notanotherquant) November 12, 2026
Japan’s producer prices rose 7.1% in October, against forecasts of 6.5%. The weak yen is making imported goods more expensive, oil and chemical prices are climbing, and AI demand is pushing up semiconductor prices. Import prices measured in yen are up 24.8% from a year ago. The pressure is coming from several directions, and Japanese companies are passing more of it along.
Traders are betting heavily on a December rate hike, with the market putting the odds around 82%. But there’s a wrinkle: BOJ board member Toichiro Asada warned Thursday against raising rates too quickly. He pointed to weak consumption and questioned whether inflation is being driven by healthy domestic demand or simply higher costs. The central bank is not exactly marching in lockstep.
And the global-market angle deserves more than the usual carry-trade scare headline. Japan’s higher rates could eventually make investors less interested in parking money overseas. But Japanese investors actually returned to buying foreign bonds in October, purchasing ¥493.9 billion after three months of net selling. They’re still net sellers for the year. So the money is moving, but a mass rush home hasn’t happened. If the yen strengthens and Japanese yields keep rising, that calculation could change. That’s the risk worth watching, not declaring Japan the first domino before it falls.
https://www.boj.or.jp/en/statistics/pi/cgpi_release/cgpi2610.pdf
If you got something out of this, please chip in to keep this site running, or subscribe to go ad-free.
0 views