Nikkei Average Falls 1,759 Points, Long-Term Interest Rate at 2.945%, Highest in About 30 Years

Long-Term Interest Rate Temporarily Rises to 2.945%, Highest in About 30 Years, with 3% Range in Sight In the bond market on the 18th, the yield on new 10-year government bonds temporarily reached 2.945%, the highest level in about 29 years and 10 months since 1996. In addition to expectations of a September rate hike by the Bank of Japan, concerns over the aggressive fiscal policy of the Takashi administration and the spillover from rising U.S. long-term yields are accelerating the selling of government bonds. 12345

Nikkei Average Falls 1,759 Points to 67,460 Yen, First Sharp Decline in Six Trading Days, Dropping Below 68,000 Due to rising interest rates and concerns over the Middle East situation, semiconductor and real estate stocks were sold off, and the Nikkei average fell sharply by 2.54% from the previous day. High-priced stocks such as Advantest dragged down the index, and Mitsubishi Estate hit a year-to-date low, while shipping stocks and Toyota were bought. 678910

Yen Weakens to Upper 159 Yen Range, No Halt Even After Coordinated Intervention In the Tokyo foreign exchange market on the 18th, the yen weakened to 159.72 yen per dollar, down 77 sen from the previous day. The effect of the coordinated intervention by Japan and the U.S. has been limited, and expectations of accelerated rate hikes by the Bank of Japan have instead led to higher interest rates, keeping upward pressure on the yen's depreciation. 11

April-June GDP Grows 1.1% Annualized, Third Consecutive Quarter of Positive Growth, but Personal Consumption Falls for First Time in Eight Quarters Real GDP increased 0.3% from the previous quarter, marking the third consecutive quarter of positive growth, but personal consumption, which accounts for more than half of GDP, decreased by 0.02% due to price hikes, the first decline in eight quarters. Experts point to the deterioration of consumption and corporate earnings due to rising prices as the biggest risk going forward. 12

September Rate Hike by BOJ 'Very Likely,' Says Former Policy Board Member Sayuri Shirai, a professor at Keio University and former member of the Bank of Japan's Policy Board, expressed the view that it is highly likely the BOJ will raise interest rates at its September meeting. In response to the coordinated intervention by Japan and the U.S., market expectations are growing that the BOJ will be forced to accelerate the pace of rate hikes. 13

Looking Ahead to the End of BOJ Rate Hikes, Next Governor Appointment May Increase 'Reflationist' Board Members With the end of the BOJ's rate hike cycle in sight, the appointment of the next governor, which will influence future monetary policy management, is becoming a focus. In the market, there are views that changes in the composition of the Policy Board could affect the yen exchange rate and long-term interest rates. 14