Japanese Wage-Price Spiral Theories Non Doing Besides Well

The full general lack of a collapse inward the JGB marketplace is presumably testing the patience of dedicated JGB bears. This does non seem also surprising, given the stability inward wage trends. I discovery that the consummate lack of a term premium inward JGB yields somewhat worrisome, given the one-sided nature of the guide a opportunity distribution. That said, at that spot is no obvious catalyst to forcefulness a re-pricing.


The saltation inward the CPI index (below) due to the increment inward the sales revenue enhancement may expect exciting for people who similar extrapolating short-term movements inward data. And it is possible that the 10 people who merchandise Japanese inflation-linked bonds made coin over that policy change. (Getting Japanese breakeven inflation information is a pretty depression priority chore for me, together with thus I am simply guessing nearly that outcome.) But equally the nautical chart shows, nosotros accept seen similar jumps, fifty-fifty inward the environs of cost grade stability that has been inward house since the early on 1990s.

As 1 mightiness accept guessed, reward are non ascent to compensate for tightening financial policy (data below are equally of March 2014). Absent wage increases, all that a weaker yen together with higher sales taxes create is driblet the existent touchstone of living of Japanese workers.

(c) Brian Romanchuk 2014