Japan Macro Report

Research evidence excerpt

Japan Macro Report

Global Markets Research

24 July 2026Japan Macro Report

EQUITY: JAPAN STRATEGY

Steps taken by Takaichi administration and Research Analysts

market reaction/assessment Japan Rates Strategy Tomoaki Shishido - NSC

tomoaki.shishido@nomura.com

Issues highlighted by the battle over the Basic Policy shock +81 3 6703 3941

Japan FX StrategyThe view that the Takaichi administration's commitment to monetary and fiscal easing is

Yujiro Goto - NSCgreater than expected caused the yen to depreciate and the bond market to weaken at the

yujiro.goto@nomura.comstart of July. Since then, we have seen changes in the government's stance that appear to

+81 3 6703 1120

be aimed at reining the market in, or taking it into consideration, for example through

revisions to the wording of the Basic Policy or comments about purchases of yen assets Macro strategy

by the GPIF or via NISAs. In this report, we look at the response of the interest rate, forex, Tomochika Kitaoka - NSC

and equity markets to steps taken by the new administration and suggest a number of key tomochika.kitaoka@nomura.com

+81 3 6703 1815points to be on the lookout for.

1. If the administration were to allow the BOJ to hike rates as a way of curbing rises

in interest rates/prices and JPY weakness, the yield curve would likely see a

substantial bear flattening

The question of whether the Takaichi administration will continue to rule out BOJ rate

hikes as way of countering JPY depreciation and inflation is likely to re-emerge as a key

focus for the markets in the run-up to the September MPM. If a major policy shift were to

occur—one in which the administration demands that the BOJ raise rates enough to

counter yen depreciation pressure and the risk of an acceleration in inflation, or at least