Matsuzawa Morning Report

Research evidence excerpt

Matsuzawa Morning Report

Global Markets Research

23 July 2026Matsuzawa Morning Report

Macro Strategy - Japan

Markets price in start of Fed rate hikes Research Analysts Strategy

Pace of BOJ rate hikes unlikely to keep up with US Naka Matsuzawa - NSC

naka.matsuzawa@nomura.com

-MarkethasonceagainpricedinaSeptemberFedratehikeofmorethan25bp,butthis +81 3 6703 3864

islikelytofallaftertheFOMC.

-TheUSterminalrateforecastedgedupwardasthemarketpricedinashifttoaratehike

trajectory,notjustaprecautionaryhike.

-TheprobabilityofaBOJratehikeinSeptemberroseinresponsetospeculativereports;

however,thepaceofBOJratehikesisunlikelytokeepupwiththeUSandJPYislikelyto

continuetoweaken.

-EvenifsomemembersvoteforaratehikeattheJulymeeting,themarketappearsto

thinkthatitwilltaketimeforaconsensustoformwithintheBOJ.

Today's Japanese markets

In Japanese markets on Thursday, this author expects bonds to weaken and upside to be

limited for equities (in overnight futures trading, bonds were down 29 sen and equities were

up JPY260 over OSE). Overseas yesterday, equities were soft ahead of US tech earnings

announcements, while bonds were also weak amid continued tensions in the Middle East.

Bonds were sold off when stocks recovered, suggesting that micro factors are supplanting

macro factors as the primary market driver. In US equities, the number of sectors and

individual stocks rising exceeded those declining, giving the impression that the rotation

within the equity market is ongoing. Within the tech sector, semiconductor stocks were

strong, but the Mag 7 and software stocks were weak. In after-hours trading following

corporate earnings announcements, stocks were generally softer, suggesting that earnings

results have been unable to beat high market expectations. In the US bond market, rate hike