Matsuzawa Morning Report

Research evidence excerpt

Matsuzawa Morning Report

Global Markets Research

27 July 2026Matsuzawa Morning Report

Macro Strategy - Japan

Decline in the Takaichi administration's approval rating and Research Analysts

the risk of policy errors Strategy

Naka Matsuzawa - NSC

Watch for foreign investors abandoning the Japanese market naka.matsuzawa@nomura.com

+81 3 6703 3864

-ThereisariskthattheTakaichiadministrationmaypushaheadwithstronger

reflationarypolicieswithoutmakingprogressinidentifyingthereasonsforitsfalling

approvalrating.

-TotheextentthatcommentsbyFinanceMinisterSatsukiKatayamaabouttheGPIF

strengthenedallthreeJapanesemarkets,thereisstillroomforanaturalpullback.

-SincetheoutbreakoftheUS-Iranconflict,foreigninvestorshavestoppedbuyingboth

JapaneseequitiesandJapanesebonds,questioningwhethertheadministrationwould

sticktoitsreflationarypolicy.

Today's Japanese markets

In Japanese markets on Monday, this author expects bonds to rebound and equities to

remain lackluster (in overnight futures trading, bonds were up 23 sen and equities were

down JPY270 over OSE). In overseas markets on Friday, expectations for a US-Iran

ceasefire agreement drove oil lower and bonds higher. Meanwhile, continued weakness in

US tech stocks stood in the way of an improvement in market risk sentiment. In the US

bond market, rate hike expectations fell and the short and intermediate zones drove gains.

Lower oil prices pushed down inflation expectations in both the US and Europe. In the US

stock market, investors seemingly sought refuge in defensive stocks. In the tech sector,

semiconductor stocks were weak, MAG7 was flat, and software stocks rose. In the FX

market, USD remained flat throughout the day, out of line with crude oil and US yields.

JPY lacked direction and was stuck in the 163.5-164.0 range against USD.