Japan's Q2 real GDP preliminary rose 0.3% QoQ (annualized 1.1%), missing
forecasts of 0.5% QoQ (2.0% annualized), data showed on Monday. The shortfall
complicates the Bank of Japan's path to further tightening: private consumption
was flat and business investment contracted sharply, signaling private-sector
caution that could prompt a more cautious BOJ stance at the next meeting despite
elevated PPI and CPI that keep pressure on policymakers. A weaker growth profile
raises downside risk for the yen if markets scale back September hike odds, and
could push JGB yields lower as near-term tightening expectations fade; external
demand partly offset the weakness but is unlikely to reverse the overall soft
momentum.
