日元创半年新高，市场押注日本央行加速加息

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Welcome to the Daybreak Asia podcast. I'm Doug Krizner. We begin in Japan where workers nominal wages rose in July at the fastest pace in nearly three decades. We're talking about an annual rate of 4.7%. Now, that gain in and of itself really strengthens the case for the Bank of Japan to proceed with what some say is a widely expected rate hike later this month. And even before those data were released, the yen had strengthened to a 6-month high against the greenback in the European session.

Now, bear in mind US markets were closed Monday in celebration of the Labor Day holiday. For a closer look at some of what we're seeing in markets, let's bring in Bloomberg Markets Live strategist David Savage. David joins from Hong Kong. Thank you for being here. Give me your sense of what's going on with the yen because even before the wage data broke, as I noted, there was a lot of positivity, a lot of strengthening in the currency.

And some people were speculating maybe on the possibility of more intervention from monetary authorities in Japan. Although to my ear, that really didn't make much sense. How do you see it?

Thanks for having me. I I think what's interesting is the latest leg of this move lower for dollar yen has happened really in the absence of much job owning from Japanese or US officials. And so, as you mentioned, you know, we saw dollar yen not only, you know, cross through 154 this morning, but certainly passed through that peak that we'd previously seen achieve through that coordinated intervention. So, I think certainly the bigger driver here is expectations that we're going to see the Bank of Japan bring forward some of that uh, policy tightening, uh, and and move from a very gradual pace to perhaps a slightly more accelerated pace.

And so, that, um, sort of fundamental driver, uh, is is certainly, um, running up against the fact that you have a lot of short covering, um, which is helping to accelerate this move into a US holiday as well.

I wondered about that. So, is it a foregone conclusion we're looking at 25 basis points in terms of a hike next week?

The market is certainly priced for for, uh, a hike, uh, next week from the BOJ. Uh, so, the real question becomes, what guidance do we get for another hike in 2026? The market is leaning, um, towards pricing that in. You know, the real interesting one would be, do we get, uh, a sense that we're going to see back-to-back hikes? So, a hike in September, um, which is priced, so, next week, and then a hike in October. Um, so, you know, that's sort of been sort of been rumbling around, um, but that would go a long way in terms of convincing the market that the the BOJ is getting serious, uh, about moving from this really gradual pace to something, uh, more accelerated.

So, David, I'm wondering if we can agree that there is a high probability of a lot more yen strength going forward. If you accept that, I'm curious about the tendency for some of the big pension funds in Japan to repatriate some of the capital that may be parked in overseas markets. Is that a risk?

It it's certainly, uh, been a risk and certainly been something that that policy makers have, uh, discussed uh, to try and control what previously was, you know, real momentum behind dollar-yen moving higher. Uh, and so, uh, you know, ultimately, we've seen JGB yields move significantly higher, which ultimately, at some point, will become attractive enough, uh, for some of those pension funds to repatriate funds back to Japan.

Uh so, that would be a a certainly a big fundamental support for the yen moving forward. Um but, you know, I I think right now the the immediate driver is simply, you know, where the market is is seeing the BOJ and some of those political pressures that have really shifted in the last couple of, you know, weeks. Previously, there was certainly the impression that uh Prime Minister Takaiichi's reflation um you know, growth forward uh policy uh you know, would have preferred, you know, monetary easing, a a real gradual approach from the BOJ.

You know, now in the last couple of weeks, you really had some some, you know, very vocal um jawboning from from US officials. So, that certainly changes potentially the dynamic there in terms of what latitude does the BOJ have to sort of accelerate that that normalization path.

So, help me understand what this may mean for the Japanese equity market. If we're talking about a stronger currency, that's going to be a negative for the exporters in Japan. But, if we're talking about the risk of repatriation, you would think that if those funds wind their way into the equity market, that that's going to be a net positive. How How do we make sense of the impact that this will have on Japanese equities?

It's a really good question because certainly, you know, the Japanese equity market has benefited uh and certainly certain components of it, those export-oriented stocks, have benefited very much from from a a uh you know, softer yen. Uh so, you know, if that really unwinds, particularly in a disorderly way, if you get a real strength suddenly in in the yen, that that could be a real headwind for for those export-oriented stocks.

I think it's worth noting though that um you know, Friday, certainly, you had this this news for about about GPT-6 that really seemed to sort of reignite some momentum behind some of these AI infrastructure stocks, which really helped sort of cushion, um, you know, the, uh, headline, uh, Japanese benchmark levels. So, um, just because of the the concentration of semiconductor semiconductor-related stocks, uh, in, uh, the Japanese equity market.

So, I think that could be one path that you see Japanese equities hold up better than some might imagine is that if that, uh, AI trade really picks up, you know, Japanese equities overall could could weather that, uh, stronger yen.

So, speaking of things picking up, I'm looking at the price of crude oil today. We still have the situation between the US and Iran that hasn't really been resolved to the satisfaction of markets. Uh, it was on Monday in the states that Iran said that a deal with Oman to manage shipping through the Strait of Hormuz is imminent. There is some concern that if Iran and Oman were to assert greater control, Tehran specifically, that that may even push oil prices higher still.

So, are Japanese investors really concerned about what's happening in the oil market? For a while they were, that seems to be kind of less top of mind right now. Can I say that?

Yeah, I I think generally I think equities have, you know, priced in a certain, uh, geopolitical risk premium into commodities, uh, into what their outlook for commodity prices will look like. It's really, you know, we haven't seen the sort of slow, um, pick up in in commodity prices really, uh, weigh on risk sentiment in equities. And I think it again, we kind of come back to the the older playbook we've had for the last couple of months.

If you get a real, um, pick up conflagration, uh, then perhaps that will weigh on on equities because then it really starts to impact um, what the rate outlook looks like. But if you're sort of just in this, you know, protracted conflict that you know, continually to have commodity prices stay higher for longer, that's a place where again the AI trade is so dominant in equity markets that it's going to you know, hold you know, the market more captive than than where the conflict in Iran goes.

So stronger currency, higher yields, which probably are going to influence the entire Treasury curve in Japan upward. And I'm wondering then if you want to play the Japanese banks as a result of what's happening in the yield curve in JGBs.

Well, Japanese banks have done extraordinarily well. Actually, banks really across Asia have done you know, really extraordinarily well. And and the Japanese curve as you said h