Matsuzawa Morning Report

Research evidence excerpt

Matsuzawa Morning Report

Global Markets Research

31 July 2026Matsuzawa Morning Report

Macro Strategy - Japan

FX intervention and BOJ meeting: Coordinated effort to Research Analysts

reverse JPY weakness? Strategy

Naka Matsuzawa - NSC

Five sources of risk that the Fed falls behind the curve naka.matsuzawa@nomura.com

+81 3 6703 3864

-AttheBOJmeeting,focusislikelytobeon:(1)theOutlookReport;(2)thevotesinfavor

ofaratehike;and(3)GovernorKazuoUeda'spressconference.Theresultswilllikelybe

neutraltodovishrelativetomarketconsensus.

-TheFXinterventionimmediatelyaheadoftheBOJpolicydecisionwasasurprise,and

canbeinterpretedintwoconflictingways:(1)apreemptivemovetocombattheincrease

inspeculativeJPYshortpositionsonexpectationsofanuneventfulBOJmeeting;and(2)

asignthatthegovernmentisgettingseriousaboutaddressingJPY'sweaknessin

coordinationwiththeBOJ.Thisauthortakesthefirstview.

-FXmarketinterventiondoesnotmeanthatthegovernmenthasabandonedits

reflationarymeasures,andisunlikelytoserveasareasonfortheBOJtobringforward

ratehikeswiththeaimofcurbingJPYweakness.

-ThesourcesoftheriskthattheFedwillfallbehindthecurveare:(1)thenextratehike

mayjustbeprecautionaryinnature;(2)excessiveconfidenceinAI’sinflation-suppressing

effects;(3)excessiveconsiderationforcreditmarkets;(4)therejectionofforward

guidance;and(5)politicalconsiderations.

Today's Japanese market

In Japanese markets on Friday, this author expects equities to rebound and upside to be

limited for bonds (in overnight futures trading, bonds were down 10 sen and equities were

up JPY1,960 over OSE). In overseas markets yesterday, US and European tech stocks

recovered, improving market risk sentiment. In addition to solid US corporate results, the

triple sell-off following the FOMC meeting the day before appears to have been something