Japan\u2019s national March CPI was due overnight, with no sharp rise expected compared with global inflation trends. Consensus forecast CPI excluding fresh food at 1.8%.<\/p>\n
Tokyo headline inflation pointed to a modest fall, linked to government subsidies keeping petrol prices near USD1 per litre. The April Composite PMI eased to 52.4 from 53.0.<\/p>\n
Manufacturing PMI rose to 54.9 from 51.6, while Services PMI slowed to 51.2 from 53.4. Factory output posted its strongest increase since February 2014.<\/p>\n
In markets, US Treasuries rose as risk mood weakened amid Middle East tensions. The article was produced using an AI tool and checked by an editor.<\/p>\n
We see a clear divergence forming between Japan and other major economies. While global inflation remains a concern, Japan’s CPI is expected to be modest, with the consensus for core inflation at just 1.8%. This suggests the Bank of Japan will have little reason to tighten monetary policy aggressively in the near future.<\/p>\n
This policy difference makes currency derivatives on the yen particularly interesting. With the US Federal Reserve holding rates firm to combat core inflation, which recent data from the Bureau of Labor Statistics puts at 2.7%, the interest rate gap with Japan is set to remain wide. Therefore, we should consider strategies that benefit from a stronger US dollar against the yen, such as buying USD\/JPY call options.<\/p>\n
At the same time, Japan\u2019s manufacturing sector is showing its strongest output growth since 2014. This, combined with a central bank that is likely to keep conditions loose, creates a positive environment for Japanese stocks, especially exporters who benefit from a weaker yen. We remember the powerful Nikkei rally in 2024 and early 2025 under similar conditions, suggesting long positions in Nikkei 225 futures or calls could be profitable.<\/p>\n
However, the underlying reason for this activity is geopolitical risk, which is causing a flight to safe assets like US Treasuries. The CBOE Volatility Index (VIX) has already risen from 14 to over 18 in the past month, reflecting growing market anxiety over Middle East tensions. Traders should therefore consider buying volatility or using put options on broad market indices like the S&P 500 as a hedge against a sudden downturn.<\/p>\n","protected":false},"excerpt":{"rendered":"
Japan CPI seen steady at 1.8%; subsidies temper inflation as PMI eases; Treasuries rise on tensions.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-45699","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45699","targetHints":{"allow":["GET","POST","PUT","PATCH","DELETE"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=45699"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45699\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=45699"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=45699"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=45699"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}