Government to Clearly State BOJ Independence in Basic Policy; Speculation Grows over GPIF Shift to JGBs

Final Draft of Basic Policy Clearly States BOJ Independence by Citing BOJ Law; Cabinet Decision on the 21st The final draft of the government's Basic Policy, to be approved in a Cabinet meeting on the 21st, has been revealed. Regarding monetary policy, the draft cites Article 3 of the Bank of Japan Law in a footnote to clearly show respect for the BOJ's autonomy. In parallel, Finance Minister Katayama mentioned a revision of the GPIF's basic portfolio and the addition of government bonds to NISA, which strengthened market expectations of increased domestic bond investment, causing the 20-year JGB yield to temporarily drop 18 basis points. 1234

Tower Semiconductor to Establish 600 Billion Yen Base in Uozu and Niigata; Government Provides 160 Billion Yen Subsidy Israel's major semiconductor foundry Tower Semiconductor announced on the 14th that it will establish a manufacturing base for silicon photonics semiconductors for optical communications in Toyama and Niigata prefectures. For a total investment of about 600 billion yen, the Ministry of Economy, Trade and Industry (METI) will provide up to about 160 billion yen in subsidies. The plan is to meet the demand for optical connections for AI data centers and start supply sequentially from May 2027. 56

Nikkei Average Rises 500 Yen, Semiconductor Stocks Lead on Dip-Buying Amid Middle East Concerns In the Tokyo stock market on the 14th, stocks initially fell due to the previous day's decline in U.S. stocks and worsening tensions in Iran, dropping temporarily by 721 yen. However, dip-buying, especially in semiconductor-related stocks, flowed in, and the closing price surged 500 yen higher to 67,743 yen. The yen traded in the lower 162 yen range against the dollar. In the U.S., the June CPI and Fed Chair testimony are scheduled for this evening. 78910