Concerns of stagflation in the Japanese economy are spreading, and the USD/JPY is rising into the 149 yen range.

【3/28Market Overview

Tokyo time,3 month Tokyo metropolitan area CPI (CPI) surprised to the upside, and the dollar/yen was driven down to150.76yen, but due to the domestic demand-driven dollar-buying, it rebounded, clearing yesterday’s high of151.15yen to151.21yen. However, with the Nikkei stock average plunging and U.S. Treasury yields in after-hours trading falling,10year yields in the United States10 fell to mid-150s yen. In European trading, the dollar/yen declined to150.36yen.NYtime,2month U.S.PCE (Personal Consumption Expenditures) came in below expectations, while thePCE core deflator exceeded expectations, suggesting persistent inflation. Thereafter,3 month U.S. Michigan University consumer sentiment index final reading missed expectations, but1year ahead &5year ahead inflation expectations were revised higher from the flash. Concerns about a higher risk of stagflation led to a sell-off in the NY Dow, and a risk-off move to yen buying and dollar selling dominated, pushing the dollar/yen to149.68yen.

【3/31Market View