Matsuzawa Morning Report

Research evidence excerpt

Matsuzawa Morning Report

Global Markets Research

3 July 2026Matsuzawa Morning Report

Macro Strategy - Japan

Foreign investors net sellers of Japanese markets since start Research Analysts

of conflict Strategy

Naka Matsuzawa - NSC

Concerns about rise in real yields stemming from Japan naka.matsuzawa@nomura.com

+81 3 6703 3864

-DespitethedropinratehikeexpectationsduetothedisappointingUSjobsreport,US

long-termbondsandtechstocksfell.

-Themarketstillpricesinahigh61%probabilityofaFedratehikeinSeptember,making

itunlikelythatthemarketwillbedrivenbyexcessliquidityagain.

-Realinterestratescontinuetoriseacrosscountries.Whileexpectationsforeconomic

recoveryarethemaindriver,weshouldalsobewaryaboutadeteriorationinbond

supply/demandconditionsoriginatingfromJapan.

-ForeigninvestorshavebeennetsellersofJapaneseequitiesandbondssincethestart

ofthewarinIran,andhavenotreturnedtobuyingonconcernsaboutreflationary

measures(errors)undertheTakaichiadministrationevenaftertheceasefireagreement.

Today's Japanese market

In Japanese markets on Friday, this author expects both equities and bonds to remain soft

(in overnight futures trading, bonds and equities were down 15 sen and JPY570,

respectively, over OSE). In overseas markets yesterday, the US jobs report came in below

forecast and rate hike expectations fell slightly. USD was sold off, and bitcoin, gold, credit,

and some other markets rose on the back of excess liquidity. At the same time, US long-

term bonds and tech stocks continued to soften. In the US bond market, inflation

expectations were flat, but real yields rose and there was a cheapening against swaps,

suggesting that supply/demand worsened. In the US stock market, semiconductor names

drove the decline, and other cyclical stocks such as capital goods and banks were also

lackluster.