- BOJ hikes to 1%, pauses bond taper from April 2027 and flags inflation overshoot risk
- Bank of Japan 25bp rate hike to 1%, as widely expected
- Goldman cuts Brent forecast to $80 for 2026, $75 for 2027 on Hormuz deal
- China May data: industrial output beats but retail sales post first fall since 2022
- BOJ set to hit 1% but vote split, bond taper pause and July signals are the real story
- China data May 2026: Industrial output +4.5% y/y (expected +4.2%)
- China house prices May 2026 -3.5% y/y (prior -3.5%)
- Oil price path to the $60s pre-war levels could take years despite Hormuz deal, analysts
- PBOC sets USD/ CNY mid-point today at 6.8108 (vs. estimate at 6.7605)
- JGBs steady, Nikkei eases from record high as BOJ rate decision looms
- GM in talks with Lockheed to make weapons parts as Pentagon seeks to restock
- Analysts back Iran deal as oil price catalyst but warn peace dividend won’t be instant
- BOJ hike certain, RBA and Fed on hold as Iran deal reshapes central bank outlook
- New Zealand data: May 2026 Food Price Inflation +1.0% m/m (prior flat at 0%)
- Hedge funds dust off pre-war playbooks as Iran deal reshapes market outlook – noodle pivot
- Barclays sees gold hitting $4,900 as Iran-driven correction fades
- Bank of Japan today – preview – set to lift rates to 31-year high as Iran deal clouds path
- Explosions heard in the Strait of Hormuz
- Hormuz reopening road map: mines, insurance and stranded ships slow the path for oil flow
- Hormuz reopening framework a fragile first step, says S&P Global
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BOJ hikes to 31-year high as Iran deal lifts regional sentiment
- Bank of Japan raised its policy rate to 1%, a 31-year high, and announced a pause in JGB tapering from April 2027; the yen barely moved with USD/JPY holding above 160.00
- The Nikkei and Topix dipped earlier in the session before bouncing on the BOJ decision headline; South Korean shares extended gains tracking Wall Street’s Iran deal rally
- Goldman Sachs cut its Q4 2026 Brent forecast to $80 from $90 and its 2027 average to $75 from $80, bringing forward Gulf export normalisation to end-July
- China’s May data showed industrial output beating at 4.5% but retail sales posting their first annual decline since the pandemic, down 0.6%, while fixed asset investment deteriorated sharply
- China’s new home prices fell at a slightly faster monthly pace in May, with the property sector continuing to grapple with fragile demand despite tentative stabilisation in larger cities
The Bank of Japan delivered its widely anticipated rate hike on Tuesday, lifting its policy rate to 1% from 0.75% and taking borrowing costs to their highest level since 1995. The decision was accompanied by a confirmation that the BOJ will pause its programme of monthly JGB purchase reductions from April 2027, fixing the buying pace at around 2 trillion yen per month. The inflation outlook was characterised in notably direct terms, with the BOJ flagging upside risk to its 2% CPI target and projecting a year-on-year increase clearly above that level in the period ahead.
The yen’s reaction was muted. USD/JPY held above 160.00 in the wake of the decision, a reminder that the market has long argued the currency needs real economy momentum and a credible path of sustained tightening rather than incremental moves to stage a durable recovery. The Nikkei and Topix had drifted lower ahead of the announcement before bouncing on the decision headline, with both indices ending the session off Monday’s record highs.
Broader regional sentiment remained constructive, underpinned by the US-Iran peace framework. South Korean shares extended the prior session’s gains, tracking Wall Street’s overnight rally as the deal continued to lift risk appetite across Asian markets.
Goldman Sachs added further weight to the oil market’s repricing, cutting its Q4 2026 Brent forecast to $80 per barrel from $90 and its 2027 average to $75 from $80. The bank brought forward its assumption for Persian Gulf export normalisation to end-July from end-August, reflecting growing confidence in the pace of Hormuz reopening. It was Goldman’s second downward revision to its oil price forecasts in a week.
China’s data gave markets more to digest. Industrial output rose a stronger-than-expected 4.5% in May, buoyed by AI-driven export demand, but retail sales fell 0.6% year on year, their first decline since the pandemic. Fixed asset investment contracted 4.1% in the year to date, well below forecasts, and property investment extended its deterioration with new home prices falling at a slightly faster monthly pace. Larger cities showed tentative signs of stabilisation but the broader sector remains under pressure from weak household borrowing appetite and subdued consumer confidence.
This article was written by Eamonn Sheridan at investinglive.com.