Tokyo’s core consumer price index (CPI) rose 3.6% year-on-year in May, marking the fastest pace of inflation since early 2023. The figure came in above market expectations, reinforcing speculation that the Bank of Japan may tighten monetary policy sooner than anticipated. With both wages and everyday living costs climbing, Tokyo’s inflation trend is increasingly seen as a key indicator for future moves by Japan’s central bank.
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U.S. GDP contracted at an annualized rate of 0.2% in the first quarter of 2025—an outcome that, while seemingly weak on the surface, actually exceeded market expectations. The slight economic dip was largely driven by ongoing tariff pressures and tighter government spending. However, core consumer spending and business investment remained surprisingly resilient, signaling that a broader recession may not be imminent. Inflation trends and future policy decisions will continue to play a critical role in shaping the economic outlook.
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Amid slowing global demand and increasing supply, international oil prices have become increasingly volatile. Key factors driving this shift include a cooling global economy, the rise of electric vehicles, and escalating geopolitical tensions. For investors in Hong Kong, it’s important to closely monitor these shifts in oil market dynamics, as they can significantly affect energy ETFs and related stocks. Staying flexible and adjusting your portfolio accordingly can help manage future market fluctuations and inflation risks.
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A U.S. court has blocked former President Trump’s proposed “Liberation Day” tariff plan, sparking an immediate rebound in the U.S. dollar. The Dollar Index surged back above 100 following the ruling. The court emphasized that the president does not have unilateral authority to set trade policy, introducing fresh uncertainty into the future direction of the U.S. economy. Markets reacted swiftly, with sharp fluctuations in both equities and currency exchange rates.
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The euro has fallen for three consecutive days against the US dollar, weighed down by a stronger greenback and growing uncertainty around the European Central Bank’s policy direction. In the short term, the euro remains under pressure. All eyes are now on the upcoming release of the U.S. first-quarter GDP data and the Federal Reserve meeting minutes later today—both of which could trigger significant market volatility. Investors should stay alert to changes in economic indicators and monetary policy signals.
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Japan’s 30-Year Government Bond Yields Hit 20-Year High as Policy Shift Jolts Markets
Yields on Japan’s 30-year government bonds have surged to their highest level in two decades, underscoring growing market turbulence sparked by a shift in the Bank of Japan’s monetary policy. The rapid sell-off in long-dated bonds, combined with a wait-and-see approach from traditional institutional buyers, has fueled capital outflows into shorter-term assets and even cryptocurrencies. This flight to more liquid investments reflects investors’ heightened sensitivity to the global inflation outlook and future interest rate moves.
This article takes a closer look at the policy decisions driving volatility in Japan’s bond market and examines the behavior of foreign capital in response. For investors keeping an eye on financial risk in Asia, understanding these dynamics will be crucial for navigating the region’s evolving economic landscape.