Inflation Expectations Over 90% Hit Record High, Tough Week Ahead Amid Middle East Oil Surge

BOJ Survey: 1-Year Inflation Expectations Hit Record High of 90.4% In the Bank of Japan's June Life Awareness Survey, 90.4% said prices would rise in one year, the highest since comparable data began in 2006. Meanwhile, the economic sentiment index worsened to -56.7, the first deterioration in about a year, raising stagflation concerns with high prices and slowing growth. 1

NY Crude Breaks $85 for First Time in a Month as Middle East Conflict Escalates Following the escalation of US-Iran military clashes over the weekend, WTI crude futures briefly surged above $85 per barrel, hitting a one-month high. With the Nikkei entering a correction phase, the Tokyo market resumes trading after a holiday in a harsh environment of rising oil and a weaker yen. 23

GPIF Bond Buying Rumors Shake Long-Term Rates and Yen According to a Nikkei report, speculation has emerged in the market that the government's giant pension fund (GPIF) is buying government bonds. This has contributed to lower long-term interest rates and a weaker yen, leading to growing wariness among participants who see it as de facto government intervention. 4

Toyota President Kenta Kon: Streamlining Parts to Boost Profitability, 'Room for Improvement' Toyota Motor President Kenta Kon stated in an interview that the company will push forward with a policy to streamline the number of parts types. By reducing costs and improving productivity, Toyota aims to lower its breakeven point and strengthen its earning power. He also clarified the intention to maintain domestic production levels. 5

Honda Extends Joint Venture with China's Guangzhou Automobile until 2038 Honda has agreed to extend its joint venture agreement with China's Guangzhou Automobile Group until 2038. Amid the shift to EVs and intensifying sales competition in the Chinese market, the company confirmed its strategy of maintaining long-term relationships with existing local partners. 6

Weaker Yen Spurs Apple to Jack Up iPhone Prices, Cost Squeeze Hits Japan Amid the historic depreciation of the yen, Apple has significantly raised iPhone prices in the Japanese market. This price hike could accelerate pass-through to a wide range of imported goods, including home appliances and daily necessities, further squeezing household purchasing power. 7

NVIDIA CEO Jensen Huang Launches 1 Trillion Yen 'Noetra' AI Project in Japan NVIDIA CEO Jensen Huang visited Japan to kick off the full-scale domestic AI 'Noetra' project, involving 44 companies including SoftBank, Sony, and Honda. The government plans to invest up to 1 trillion yen by 2030 to build a 'physical AI' platform for factories and robots. 8

Amazon Japan Logistics Firm Adopts Yen-Pegged Stablecoin for Driver Payments Logistics giant AZ-COM Maruwa Holdings will introduce the regulated yen-pegged stablecoin 'JPYC' for payments to partner companies and truck drivers handling deliveries for Amazon Japan. Aiming to ease labor shortages and improve payment efficiency, this will be Japan's first large-scale corporate use of a stablecoin. 9

Euro/Yen Lacks Direction, Market on Hold Ahead of ECB and BOJ Meetings In the forex market, euro/yen continues to move little in the mid-185 yen range. With investors wanting to see outcomes of the ECB meeting this week and the BOJ policy meeting next week, a wait-and-see mood prevails. Middle East risks and wariness about intervention underpin the yen. 10