The Bank of Japan’s September Tankan survey is scheduled to be released at 8:50 a.m. Japan time. The market expects the large manufacturers’ DI at +25 and the large non-manufacturers’ DI at +36, with improvement in one sector and deterioration in the other from the previous June survey. The Bank of Japan’s rate-hike policy and inflation outlook will be key points of focus.
The Bank of Japan will release its September Tankan survey at 8:50 a.m. Japan time. It will provide initial data on corporate sentiment immediately after the Bank of Japan raised its policy rate from 1.00% to 1.25% at the Monetary Policy Meeting on 18 September. As Governor Ueda (植田和男) indicated at his press conference that the policy phase had changed, the Tankan is expected to attract attention as a data point ahead of the Outlook for Economic Activity and Prices report. The market will also focus on the “Summary of Opinions” released at the same time, assessing how inflation expectations and perceptions of labor shortages, in addition to business sentiment figures, may affect future rate-hike decisions.
The market expects the large manufacturers’ DI at +25 and the large non-manufacturers’ DI at +36. Compared with the previous June survey, manufacturing is expected to continue improving while non-manufacturing is expected to deteriorate slightly. The results could also affect dollar-yen and the Nikkei 225, with corporate inflation expectations, perceptions of labor shortages and wage-hike prospects expected to be key areas of focus. The “Summary of Opinions” from the September meeting is also scheduled for release at the same time, and the foreign-exchange market may react more strongly to these issues than to the Tankan figures themselves.
Looking back at the previous June survey, the large manufacturers’ business conditions DI was +22 and the non-manufacturers’ DI was +37, both at high levels. The forward-looking indicators were +17 for manufacturing and +28 for non-manufacturing, suggesting that while the outlook remained cautious, expectations of deterioration could spread. Inflation expectations remained high for the one-year-ahead rate, and the selling-price judgment DI indicated a strong willingness to raise prices. The survey was explained as reflecting the background of yen depreciation and rising prices.
Key points in the current market forecast include whether corporate inflation expectations remain elevated, whether the selling-price judgment DI can keep pace with rising input prices, and how the borrowing-rate judgment DI will affect expectations for future financial conditions. If these factors strengthen, expectations of a Bank of Japan rate hike could intensify and yen buying could become more likely. If the data are weak, yen selling and financial-market reactions could diverge.