REDUCED OUTLOOK FOR JAPANESE ASSETS 1/3

09 Jun

REDUCED OUTLOOK FOR JAPANESE ASSETS 1/3

Japan's GDP experienced an unexpected contraction in Q1 2025, the first decline in a year, which was more severe than anticipated. This downturn, with an annualized contraction of -0.7%, was primarily driven by stagnant private consumption and a significant negative contribution from net exports, highlighting the underlying fragility of the economy.

Key Points

  • Slowdown in consumption and exports in Q1
  • Uncertainty remains high for Q2
  • Leading indicators still mixed
  • Consumption resilient but still cautious
  • Inflation weakens slightly but remains high
  • BoJ unlikely to touch rates in 2025
  • 10-year yields stall at 1.5%
  • Yen likely to strengthen against the dollar
  • The Nikkei’s rebound is now likely to run out of steam