REDUCED OUTLOOK FOR JAPANESE ASSETS 2/3

Leading indicators for the Japanese economy in Q2 2025 present a mixed and uneven picture, suggesting a moderate and uneven growth trajectory. The services sector is showing signs of resilience but with a notable slowdown in its expansion, while the manufacturing sector remains in contraction for the eleventh consecutive month. The composite PMI for May 2025 fell slightly to 50.2, indicating a moderation in overall private sector growth, with new orders continuing to show weakness due to the impact of US tariffs.