Matsuzawa Morning Report

Research evidence excerpt

Matsuzawa Morning Report

Global Markets Research

24 July 2026Matsuzawa Morning Report

Macro Strategy - Japan

Research Analysts

Slump in market volatility seems suspicious Strategy

Naka Matsuzawa - NSC

Repeat of summer 2024: watch for policy errors in Japan naka.matsuzawa@nomura.com

+81 3 6703 3864

-Althoughthereareplentyoffactorsthatcouldpushvolatilityhigher,marketsare

assigningthemlowprobabilityandarenotreacting.

-BewaryofavolatilityshockcausedbyafailureofJapan’sreflationpolicy.

-InanenvironmentcharacterizedbyhighoilpricesandhighUSrates,itisdifficultto

dispelconcernsthattheBOJisbehindthecurve.

-TheBOJlikelycannotcarryoutaratehikeinSeptemberwithoutmessagingfromthe

governmentaimedatrestrainingJPYweaknessandencouragingBOJneutrality.

Today's Japanese markets

In Japanese markets on Friday, this author expects equities to fall back and bonds to

remain in a decline (in overnight futures trading, bonds and equities were down 13 sen

and JPY920, respectively, over OSE). In overseas markets yesterday, US tech stocks

collapsed, hurting the market's risk sentiment. Corporate earnings results, higher oil

prices, and higher yields all hurt the market. In the US bond market, rate hike expectations

continued to rise and the short zone drove the decline. In addition to high oil prices

reflecting tensions in the Middle East, a significant improvement in US jobless claims likely

had an impact as well. The market priced in a 34% probability of a rate hike in July and a

106% probability in September. In the US stock market, tech stocks, and MAG7 in

particular, drove the decline. Semiconductors and software also fell. At the same time,

other cyclicals such as capital goods and banks held firm, and advancing issues