Japan’s Inflation Drama: Is Your Crypto Safe? 😱💸

by

What to know:

  • Japan’s headline inflation is like that one friend who always shows up uninvited—nearly 100 basis points above U.S. inflation! 🎉 This hasn’t happened since 2015, and it’s highlighting some serious domestic price pressures. Who knew inflation could be so clingy?
  • With inflation soaring, the Bank of Japan is feeling the heat and might just raise rates. This could send shockwaves through global markets and make cryptocurrencies sweat a little. 💦

Just when we thought the yen scare was taking a vacation, Japan decided to throw a surprise party with an uptick in core inflation. 🎈

Data released early Friday showed Japan’s core inflation, which conveniently ignores fresh food prices (because who needs veggies anyway?), rose 3% year-on-year in February. That’s down from January’s 3.2%, but hey, it still beat the forecast of 2.9%. The headline consumer price index took a little breather, easing to 3.7% from 4%. Phew! 😅

Both indices are still way above the Bank of Japan’s 2% inflation target, which means Haruhiko Kuroda can keep declaring victory over deflation like a champ. 🏆 And since November, Japan’s inflation has been hotter than a summer day in Tokyo—almost 100 basis points higher than the U.S.!

This sticky inflation, combined with wage hikes from the shunto wage negotiations (which sounds like a fancy sushi roll), has everyone buzzing about potential BOJ rate hikes. In other words, a yen rally could be back on the menu, and it might just mess with our beloved cryptocurrencies. 🍣💔

As of writing, the dollar-yen (USD/JPY) pair is trading at 149.22, having bounced nearly 300 pips like a rubber ball since March 11. Talk about a yen weakness comeback! 🎢

But wait, there’s more! The narrowing U.S.-Japan 10-year bond yield spread is giving the yen a little boost. Japanese yields are rising like my blood pressure during tax season, with the 10-year bond yield above 1.5% and the 30-year yield above 2.5%. Both are at multi-decade highs! 📈

A renewed yen strength could lead to risk aversion, reminiscent of the panic we saw last August. Buckle up, folks! 🚀

Read More

2025-03-21 14:33