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TANKAN |
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The OECD leading economic indicators, the Tankan diffusion index of large manufacturers and the Cabinet Office's coincidental indicator of business conditions, as well as 10-year JGBs, are giving strong hints that the Japanese economy may be heading for a cyclical peak. Although Japan's domestic economy continued to struggle with deflation and severe structural problems, including mounting bad loans in the financial sector and growing bankruptcies, some indicators (including strong reported first-quarter GDP, a firming of industrial production, and a somewhat better reading on business sentiment in the BOJ's second-quarter Tankan survey) suggested that a cyclical recovery has begun. Last December the Bank of Japan's quarterly Tankan survey of business confidence hit a six-year high, with many of the largest firms, especially car makers, believing that business conditions are much improved. |
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