Japan’s real GDP for the second quarter of 2015 has been published, and the real GDP grew by 0.71% (year-on-year) during the quarter.
The details suggest the house holds are struggling due to the consumption tax hike in 2014, and this tendency could accelerate after another consumption tax hike in 2017. The growth of fixed investment implies industries are doing better because of the quantitative easing, although the exports slowed down despite the weak yen.
The GDP of the US grew by 2.32% in the 2nd quarter of 2015, weakened from 2.88% in the same quarter of the previous year. The US economy is affected from the strong dollar, but the number is still strong enough to justify the Fed’s rate hike in Sep.
If we see the details, investment and exports are weak as expected, but the slowdown of imports is a bit of surprise. Personal consumption is weakened, too, which indicates with imports the weak demands within the country.
Continue reading US GDP weakened at 2Q 2015 but still strong enough for a rate hike in Sep
On 5th, the ECB (European Central Bank) had a council meeting and set the deposit facility interest rate to be negative. After the announcement, EUR/USD fell to 1.356, and as the press conference started, the rate became 1.3503, but the euro was bought afterwards and now it’s traded at around 1.366, which is higher than the rate before the meeting.
The most significant decision in the meeting is the €400 billion TLTRO (Targeted Long-term Refinancing Operation), which will expand the monetary base by about 34%. Continue reading ECB expands the monetary base with negative rate and LTRO
According to OECD, the immigration flow to Germany reached 400,000 in 2012, making Germany the second most popular destination for immigrants, following the US. Germany was the eighth popular in 2009. Urged by the euro zone crisis, the 300,000 immigrants were from other EU countries, since many jobless people sought a job in Germany, the economy of which had been recovering the most successfully in the euro zone.
The unemployment rate Italy remains 12%, and that of Spain remains 25%. The flow of the jobless people is supposed to oppress the German labour market, lowering the PPI.
As has often been pointed out, the fatal flaw of the euro is that any of the countries isn’t allowed to adopt the monetary policy that suits the economic situation of the country. Since Germany hates inflation, the ECB can’t do what they must do. In the meeting next month, some financial easing is expected, although a mere interest rate cut could hardly stop the structural disinflation.
According to Reuters (the source in Japanese), BOJ’s Kuroda said the inflation rate would remain fairly strong after the central bank achieves the inflation target of 2%. This statement is significant in the sense that he implied the moderate increasing of the inflation would be acceptable even after it becomes 2%.
As the increasing of the inflation usually follows the financial easing, considering the fact that the BOJ is willing to continue the QE until the inflation rate becomes 2%, the inflation rate is likely to increase after the QE up to around 2.5%. Consequently, the long-term interest rate, which is currently around 0.6%, couldn’t avoid to be hiked after the BOJ finishes the QE. The time to be short the bond futures is approaching.
According to Miki Shoji, the office vacancy rate in Apr in the central Tokyo was 6.44%, improved 0.06% from Mar, 1.9% year-to-year.
In the business district in Sapporo, the vacancy rate was 8.36%, improving 0.09% from Mar and 0.82% year-on-year.
In the business district in Sendai, the vacancy rate was 11.62%, improving 0.13% from Mar and 1.64% year-on-year.
In the business district in Yokohama, the vacancy rate was 9.29%, improving 0.04% from Mar and 0.42% year-on-year.
In the business district in Nagoya, the vacancy rate was 8.95%, improving 0.08% from Mar and 1.61% year-on-year.
In the business district in Osaka, the vacancy rate was 9.45%, which was the same as in Mar and improved 1.75% year-on-year.
In the business district in Hukuoka, the vacancy rate was 9.62%, improving 0.47% from Mar and 1.97% year-on-year.
Although the rent of offices aren’t directly under the influence of the tax hike, it’s notable that one of the statistics showed the continuous recovery of the property market in Japan after the tax rise. The investors will keep their eyes on other statistics such as Apartment Market Overview (19 May), Department Stores Sales (20 May) and Building Construction Statistics (29 May).
The ECB says that they are ready to take action against the strong euro, which could worsen the low inflation in the euro zone economy. Consequently, Gecina (EURONEXT:GFC), a REIT based in Paris, was hiked by 2.68% on 8 May, whereas GSW Immobilien (XETRA:GIB), a property company based in Berlin that had been already appreciated for months, went up by 0.83%. The next meeting of theECB will be held in 5 Jun.