Snapshot: The Nikkei 225 wrapped up its Tokyo session 0.28% higher at 71,250, locking in a powerful 8% gain for the week as Japan’s core CPI matched expectations at 1.4% in May. This contained print, paired with a dovish undertone in the BoJ’s April minutes and Deputy Governor Himino’s latest report, confirms that domestic policy remains highly accommodative. This domestic stability insulated Japanese equities from global cross-currents, even as US Treasury yields advanced.
- The 1.4% core inflation print confirms there is zero domestic pressure on the BoJ to accelerate rate hikes, keeping the local cost of capital depressed and securing 71,000 as a formidable near-term floor for the N225.
- US yields are creeping higher with the 10-year real yield at 2.23%, meaning any hawkish surprise from the 08:30 ET US macro data could trigger a cross-asset tech shakeout that dampens Tokyo’s afternoon momentum.
Bias into NY: We hold a constructive bias for the Nikkei 225, looking for consolidation above 71,200, as the BoJ’s ultra-gradual normalization path keeps Japanese equities highly attractive relative to peers facing higher-for-longer US rates.