Japan Macro aug 10

10 August 2026 Fixed Income | Japan Macro Weekly

Global economy and finance: Weekly watch (10 August)

Yusuke Matsuo Senior Market Economist Review of key indicators and events

Shintaro Inagaki 3–9 August: Events ranked from ※ to ※※※ in ascending order of Senior Market Economist interest Domestic bond prices fell last week, led by weakness in the short-term sector. Following the coordinated forex intervention by Japan and the US, there was growing speculation Yasuhisa Irie that the BOJ would accelerate its rate hikes as part of the authorities’ efforts to stem the Market Economist decline in the yen. Additionally, weak results for the 10y JGB auction on 4 August helped send the 10y JGB yield higher. In the forex market, USD/JPY fell sharply at the start of the Ryosuke Katagi week but subsequently traded mostly sideways in the 157.0–158.0 range. As of August 7, Market Economist the 10y JGB was trading to yield around 2.8%, while USD/JPY was hovering in the 158.0– range (the pair subsequently dropped below 157 as the dollar fell on a weaker-than- expected July US payroll report). Shota Amano Market Economist Economic indicators ・ 5 August (Wednesday)

※※ Monthly Labour Survey for June Total cash earnings rose +3.4% YoY, up slightly from a +3.3% YoY increase in May. Growth in scheduled cash earnings climbed to +3.4% YoY from a +3.0% increase in the previous month. While June is typically a month in which bonuses are paid, special cash earnings grew only +3.5% YoY and did not have a major impact on the overall outcome. Real wages—adjusted for inflation using the CPI ex imputed rent on owner-occupied housing—increased +1.6% YoY, unchanged from May. Inflationary pressures stemming from escalating tensions in Iran are likely to weigh on real wages going forward, but we expect real wage growth will remain positive for now if the current rate of growth in total cash earnings can be maintained.

Scheduled cash earnings for full-time employees at businesses in the survey for at least one year rose a solid +2.9% YoY in June, up from a May gain of +2.5%. YoY wage growth appeared to be slowing after hitting +3.0% in February but picked up again in June. With the results of the spring 2026 wage negotiations now being reflected in the data, it appears reasonable to conclude that wages continue to grow at a fairly firm pace.

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※※ Family Income and Expenditure Survey for June

Consumption expenditures in households with two or more people fell for a seventh straight month in June, sliding -3.3% YoY in real terms. One contributing factor was reduced spending on health insurance. On a seasonally adjusted basis, consumption expenditures declined for the first time in three months, dropping -6.4% MoM.

Real incomes in working households with two or more people rose for a sixth consecutive month, climbing +2.0% YoY. CPI inflation remained subdued in June, and bonus payments were higher on average than in the previous year.

Economic outlook (as of 10 August)

Chart 1. Macro team forecasts for Japanese economy (%) By quarter YoY change at end-FY 3Q 25 4Q 25 1Q 26 2Q 26 3Q 26 4Q 26 1Q 27 2Q Real GDP QoQ - QoQ, - annualized Private consumption QoQ Private residential investment QoQ - Private non-residential investment QoQ - Government consumption QoQ Public investment QoQ - Goods & services: exports QoQ - Goods & services: imports QoQ - CPI (All items) YoY Core CPI (All items less fresh food) YoY The BOJ's preferred core-core CPI YoY (All items less fresh food and energy) Comments on real GDP outlook Looking ahead, higher crude oil prices due to the conflict in Iran are expected to weigh on private consumption by stoking inflation. However, we project real wage growth will remain marginally positive, with little likelihood of a sharp downturn in private consumption. We expect capital expenditures and exports will remain resilient, supported in part by…