Japan

Research evidence excerpt

Japan

Ayako Fujita (81-3) 6736-1172 Japan Economic Research J P M O R G A Nayako.fujita@jpmorgan.com

JPMorgan Securities Japan Co., Ltd. 02 July 2026

Takuho Morimoto (81-3) 6736-6682

takuho.morimoto@jpmorgan.com

Japan BoJ Tankan: stronger momentum, higher

inflation

• Fiscal concerns and political pressure to curb BoJ The BoJ’s June Tankan survey indicates that the strongest hikes are underpinning yen weakness and higher JGB

corporate momentum in decades remains intact. The all-firms yields

business sentiment index was unchanged at 18 from March,

• BoJ Tankan highlights strong growth momentum, and but that still represents the highest level since mid-1991.

higher inflation expectations Business sentiment is solid in both manufacturing and non-

• Marking up 2Q growth on solid durable goods sales; manufacturing. The large non-manufacturing DI, which has

2H growth forecast is also revised up consistently held at multi-decade highs for several years,

edged up further—from 36 in March to 37 this time (Figure

• Next week: May wages and real consumption 1). Meanwhile, the large manufacturing DI, which had some-

The government’s push toward fiscal expansion, together what lagged non-manufacturing, improved markedly, rising

with its stance aimed at discouraging further rate hikes, con- from 17 previously to 22.

tinues to weigh on JGB and FX markets. In the draft growth

strategy released this week, language was included calling on Figure 1: BoJ Tankan business sentiment, large firms

the BoJ to align itself with the government’s growth invest- DI, boxes show 3-mo outlook

ment efforts aimed at achieving a “strong economy.” Markets 45 Non-manufacturing

took this as a strong signal intended to restrain the BoJ from

30continuing with rate hikes. As a result, USD/JPY broke above