Japan Update 8 December 2025

The collapse of household spending is the leading indicator in Japan. An increasingly hostile public, going through their third prime minister in a year, are voting with their wallets.

A weakening YEN and rapidly rising rising rates have economic doomsayers venting all over social media. But MoF/BoJ have so far managed to normalise interest rates efficiently. On the 19th the BoJ should hike to confirm.

They’ve done well and even managed good 10 and 30 year bond auctions. But rates are now climbing very rapidly and at some point BoJ will need to support bonds and let the currency slide. Because that’s what central banks always do.