After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement.
Outlook Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%, and Trading Economics says the consensus forecast is 2.7% but it offers 2.7%. This looks like how many angels can dance but it’s a big deal in Japan after decades of deflation. The latest highest high is 155.75, the worst quote in three decades. We dismissed yen intervention talk over the past few weeks, but the day of reckoning may well be upon us. See the chart from the FT.
There are multiple triggers for the move, including renewed appetite for risk on stalemate in the Middle East, rising Bund yields, chatter about the US economy slowing while some Europeans are thriving, and so on—take your pick. The outlook is binary. Favorable PCE=yield and dollar drop. Highish CPE=yields stay high, dollar recovers. Reasons for the Fed to cut rates Avoid embarrassment from getting inflation wrong twice. Normalize the yield curve. Head off any recessionary tendencies.
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