Rising Yields, Stronger Yen Pose Risks to Japan's Economic Recovery
Dow Jones
Yesterday
0735 GMT - Rising real long-term yields in Japan are undercutting corporate capital expenditure, says Daiwa Securities analyst Eiji Kinouchi. "Combined with recent yen appreciation, this creates a heightened risk of an economic downturn," he says. April-June growth data shows capital spending declined for a second straight quarter on an on-quarter basis. The yen's appreciation may reflect growing recession fears, as weaker domestic demand reduces imports and pushes the trade balance toward a surplus, Kinouchi adds. "The current mix of declining capex and a stronger yen presents a worrying sign." The 10-year Japanese government bond yield last stood at 2.980%, while the dollar was last trading at 154.20 yen.
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