Japan Macro Macro Weekly

14 September 2026 Fixed Income | Japan Macro Weekly

Global economy and finance: Weekly watch (14 September)

Yusuke Matsuo Senior Market Economist Review of key indicators and events

Shintaro Inagaki 7–13 September: Events ranked from ※ to ※※※ in ascending order of Senior Market Economist interest The domestic bond market was generally firm in the first half of last week as the yen continued to rise against the dollar on expectations of a faster pace of BOJ rate hikes Yasuhisa Irie and speculation of a portfolio review by Japan’s public pension funds. However, yen rates Market Economist turned higher in the latter half of the week as the rise in overseas rates spilled over into the Japanese market. As of 11 September, the 10y JGB yield was trading in the upper 2.9% Ryosuke Katagi range, while USD/JPY was hovering between 154.0 and 154.5. Market Economist Economic indicators ・ 8 September (Tuesday) Shota Amano Market Economist ※※ Monthly Labour Survey for July Total cash earnings rose +4.7% YoY, topping the June increase of +4.0% and marking the highest rate of growth since January 1997. Scheduled cash earnings grew +4.1% YoY, up from a +3.5% gain in the previous month, and special cash earnings rose a solid +6.3% YoY. Also notable was the +5.7% YoY increase in hourly wages for part-time workers, representing the highest rate of growth since June 2020. Real wages—adjusted for inflation using the CPI ex imputed rent on owner-occupied housing—climbed +2.4% YoY, surpassing June’s +2.2% increase and marking the largest gain since May 2021. While inflationary pressures stemming from escalating tensions in Iran are expected to weigh on real wages going forward, we forecast real wage growth will remain positive for now.

Scheduled cash earnings for full-time employees at businesses in the survey for at least one year rose +2.7% YoY in July, down slightly from June’s gain of +2.9%. Adjusting for the sample suggests that scheduled cash earnings were not as strong as the headline figure. Nevertheless, with the results of the spring 2026 wage negotiations now being reflected in the data, it appears reasonable to conclude that wages will continue to grow at a fairly firm pace.

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※※ Second preliminary estimates of 2Q GDP Real GDP growth was revised up slightly to +0.4% QoQ (+1.4% annualized) versus +0.3% QoQ (+1.1% annualized) in the first preliminary estimates, with the growth estimate for private nonresidential investment improving from –1.2% QoQ to –0.9% while that for private consumption switched from negative to positive (albeit only barely). The solid overall growth figure did admittedly owe at least something to a sharp decline in imports (attributable to the Iran situation) as well as a sizable contribution from private inventories. These factors should continue to be taken into account, but the results nevertheless reaffirmed the resilience of the Japanese economy and are unlikely to have much impact on the BOJ’s decision regarding whether to accelerate the pace of its rate hikes.

Higher oil prices do look likely to keep weighing on private consumption for at least the time being, but (modest) growth in real wages should meanwhile help to stop spending from dropping off too sharply. We are moreover forecasting that private nonresidential investment will start expanding again with support from booming AI-related demand and that growth in exports will remain solid (particularly for semiconductors and related sectors), thereby helping to keep the economy as a whole growing at slightly better than "potential".

※ July balance of payments Japan’s current account surplus amounted to JPY2,988.9 billion in July, rising JPY402.6 billion YoY and beating the Bloomberg consensus forecast of a JPY2,849.5 billion surplus. The trade deficit widened to JPY399.9 billion. Meanwhile, an increased surplus for travel services helped reduce the…