USD/JPY flows: Household Spending Continues to Fall

The Japan Overall Household Spending is down 1.2%m/m in April while y/y arrived at 0.5% as expected. It continue to suggest the translation between higher wage and inflation are yet to materialize. Our central forecast are wary that BoJ will have overestimating the magnitude of wage hike driven inflation and the April data aligns. However, April is only the first month after the historic wage negotiation. If wage picks up in the coming month, it maybe more supportive for further BoJ hikes.

Both the U.S. Treasury and JGB yields are higher across the curve and see USD/JPY slips 0.02% to 155.57.