Wages in Japan disappointed again in June, rising less than economists had forecast. Moreover, real wages--wages adjusted for inflation--fell year-on-year for the 15th month in a row (see chart above showing year-on-year changes per quarter). As a result, real consumer spending fell year-on-year for the fourth month in a row, bringing spending during April-June 5% below its 2018 level.

These results have refuted the forecasts that the big pay hike in the spring Shunto negotiations between big companies and their unions would lead to a pay hike throughout the economy. That, in turn, means lackluster growth and a longer period before the Bank of Japan (BOJ) will feel confident that healthy 2% demand-led inflation will return to Japan on a sustained basis. This, in turn, means that interest rates and the yen/$ rate will be softer in the next few months than many market players had expected.

For details, see https://richardkatz.substack.com/publish/post/135898066