پیش‌نمایش شاخص قیمت تولیدکننده (PPI) بخش خدمات ژاپن: تمرکز بر نرخ ۳.۷ درصدی پیش از تصمیم‌گیری روز جمعه BoJ

The services PPI is rarely a big mover for the yen on its own, but a reading at or above 3.7% would reinforce December hike pricing and lend modest support to the yen and short-dated JGB yields into Friday. A downside surprise would carry more weight than usual, coming after the sharp September slowdown in goods producer prices, and could lean against the yen by encouraging talk of a slower BoJ path. With an October hike effectively priced out, the yen’s bigger reaction is more likely to come from the tone of the BoJ’s outlook report and Ueda’s press conference than from this data.

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Japan’s services inflation is running at a two-year high, and the BoJ’s real test this week is whether it is willing to say underlying inflation has finally reached 2%.

Japan’s September services PPI (corporate services price index) is due at 23:50 GMT (19:50 US Eastern), with consensus at 3.7% y/y, unchanged from August

August’s 3.7% was the fastest pace in more than two years; excluding international transportation it was a softer 3.2%

The index tracks business-to-business service prices and is watched for evidence that wage growth is passing through to prices

September goods PPI slowed to 6.8% y/y from 7.6%, well below expectations

The BoJ meets October 29-30 and is widely expected to hold at 1.25% after September’s hike; more than 80% of economists in a Bloomberg survey see the next move in December

The key focus is whether the BoJ judges underlying inflation has reached its 2% target, something it has never declared since adopting the goal in 2013

Main article: Japan’s services producer price index for September is due at 23:50 GMT (19:50 US Eastern time), and while it rarely moves markets on its own, this release lands just days before a Bank of Japan meeting where the inflation narrative will matter more than the rate decision itself. Consensus looks for annual growth to hold at 3.7%, matching August’s reading, which was the fastest pace in more than two years.

The index, published by the Bank of Japan and also known as the corporate services price index, tracks what companies charge each other for services such as transport, communications, finance, real estate, advertising and equipment leasing. It is labour-intensive by nature, so it is watched as a gauge of whether rising wages are being passed through into prices. That makes it a useful cross-check on the BoJ’s view that pay growth is feeding a self-sustaining inflation cycle, rather than inflation being driven mainly by imported costs.

Context from the goods side has been less hot. Japan’s goods producer price index slowed to 6.8% year on year in September from 7.6% in August, well short of expectations, helped in part by government fuel subsidies. A steady services reading against that backdrop would suggest domestic price pressure is holding up even as some cost-push pressure from raw materials eases. One caveat: part of August’s strength came from international transportation, and excluding that component the index rose a more modest 3.2%, so the breakdown deserves as much attention as the headline.

The BoJ meets on October 29 and 30, with the decision due on Friday. The bank raised its policy rate to 1.25% in September on a 7-2 vote, and a hold is the overwhelming expectation this week. A Bloomberg survey found more than 80% of economists expect the next hike in December, with none forecasting a move in October. Governor Kazuo Ueda has signalled there is no need for back-to-back increases, while making clear that rates will need to rise further toward a neutral level.

The bigger question for markets is whether the BoJ’s quarterly outlook report judges that underlying inflation has reached its 2% target, a declaration it has never made since adopting the goal in 2013. A firm services print would add weight to that case and to December pricing, while a softer reading would give the board more room to stay patient.

This article was written by Eamonn Sheridan at investinglive.com.