Matsuzawa Morning Report

Research evidence excerpt

Matsuzawa Morning Report

Global Markets Research

30 July 2026Matsuzawa Morning Report

Macro Strategy - Japan

Research Analysts

Fed Chair Warsh: A dove in hawk's clothing? Strategy

Naka Matsuzawa - NSC

Damage control on food tax cuts naka.matsuzawa@nomura.com

+81 3 6703 3864

-WhileChairWarsh'stoneremainedhawkish,themarketseemstobequestioning

whetherhisactionswillfollowsuit.

-OperatingwithoutforwardguidanceexposestheFedtotheriskoffallingbehindthe

curvebetweennowandthenextFOMCmeetinginSeptember.

-ThefoodtaxcutisnowmoreaboutlimitingfurtherdamagetotheTakaichi

administration'sapprovalrating;itisessentialthatitnottriggeranegativemarket

reaction.

-Ifalternativefundingsourcesleantooheavilyonnaturalrevenuegrowth,marketswill

worryaboutfiscalrisksandazero-sumcompetitionforresourcesbetweengrowth-

strategyinvestmentanddefensespending.

Today's Japanese markets

In Japanese markets on Thursday, this author expects both equities and bonds to fall (in

overnight futures trading, bonds and equities were down 36 sen and JPY1,410,

respectively, over OSE). In overseas markets yesterday, markets reacted to the FOMC

outcome with a triple selloff in bonds, stocks, and USD. Rising oil prices due to Middle

East tensions also led to weaker bonds and risk-off sentiment. US tech earnings were

mixed, but equity futures rebounded slightly in after-hours trading. In the US bond market,

near-term rate hike expectations declined and only short-term bonds rose. In the long

zone, inflation expectations rebounded significantly. Real yields also rose slightly and

USTs cheapened against swaps, suggesting that supply/demand had worsened. In the US

stock market, not only tech stocks, but also cyclicals such as capital goods and banks fell

across the board.