Yen surges, long-term rates plunge after Finance Minister Katayama's comments; GPIF review in focus

Finance Minister Katayama indicated a policy to expand domestic investment by GPIF, leading the yen exchange rate to rise to the 161 level and long-term interest rates to drop to 2.70%. Meanwhile, the June corporate goods price index rose 7.1% year-on-year, exceeding expectations, heightening caution over continued high prices. Corporate bankruptcies in the first half also exceeded 5,000, with both labor shortages and price hikes recording all-time highs, manifesting downside risks to the economy.

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Finance Minister Katayama suggests GPIF domestic investment expansion, reversal to yen appreciation and rate decline Finance Minister Katayama acknowledged the 'Honebuto shock' in a press conference on the 10th while indicating a policy to encourage investment by pension funds such as GPIF in domestic financial assets. This led the yen to temporarily surge to the 161 level and long-term interest rates to drop by 0.175% from the previous day to 2.70%. 1 2 3 4

June corporate goods price index rises 7.1%, highest growth in 3 years 3 months The Bank of Japan's June corporate goods price index (preliminary) rose 7.1% from the same month last year, exceeding the market forecast of 6.8%. Against the background of high oil prices and a weak yen, price pressure from upstream remains strong, sparking concerns about spillover to consumer prices. 5

First-half bankruptcies 5,335, price hikes and labor shortages hit all-time highs The number of corporate bankruptcies nationwide (with liabilities of 10 million yen or more) in the first half of 2026 announced by Teikoku Databank was 5,335, exceeding 5,000 for the second consecutive year. Bankruptcies due to price hikes totaled 556 and those due to labor shortages totaled 227, both setting new records. 6