Matsuzawa Morning Report: Macro Strategy - Japan

Research evidence excerpt

Matsuzawa Morning Report: Macro Strategy - Japan

Global Markets Research

1 July 2026Matsuzawa Morning Report

Macro Strategy - Japan

Research Analysts

Scenario: Fed behind the curve Strategy

Naka Matsuzawa - NSC

Is the AI boom pushing up inflation? naka.matsuzawa@nomura.com

+81 3 6703 3864

-Warshwilllikelyshelve,fornow,theargumentthatAIwillrestraininflation,butheis

unlikelytomakeanypromiseaboutanearlyratehike.

-Ifemploymentdatacontinuestosurpriseontheupside,themarketwilllikelyjudgethat

inflationarypressuresarepersistentandcallforconsecutiveratehikestoslowthe

economy.

-Oneortwoinsurance-typeratehikeswouldprobablybeinsufficienttoslowthe

economy,includingAI-relatedinvestment;thebondmarket'syieldcurvewouldlikelybear

steepeninthiscase.

Today's Japanese market

In Japanese markets on Wednesday, this author expects equities to continue rising and

bonds to remain in a decline (in overnight futures trading, bonds were down 28 sen and

equities were up JPY800 over OSE). In overseas markets yesterday, expectations for an

economic recovery rose overall, and equities strengthened while bonds weakened. US

JOLTS data came in above forecast. However, movements in the US bond market were

disproportionately large relative to the news and was not consistent with other markets.

This was likely influenced by quarter-end position adjustments and caution ahead of

remarks by Fed Chair Warsh, discussed below. While rate hike expectations barely

changed, real yields rose sharply in the long zone, which also cheapened versus swaps,

suggesting a deterioration in supply-demand conditions. Inflation expectations also rose.

In the US stock market, tech and cyclical sectors led the gains. In the FX market, USD lost

momentum despite higher US yields, while cross currencies rose amid risk-on sentiment.