Japan’s Core Inflation Rises to 3% Amidst Rate Hike Speculation

Japan's core inflation rose 3% year-on-year in February, down from 3.2% in January but above the forecast of 2.9%. The headline consumer price index decreased to 3.7% from 4%.

• Both indices exceed the Bank of Japan's 2% inflation target.
• Japan's inflation rate is now nearly 100 basis points higher than that of the U.S.
• Sticky inflation and wage hikes are increasing calls for potential BOJ rate hikes.
• The USD/JPY pair is trading at 149.22, indicating renewed yen weakness.
• Japanese 10-year bond yield is above 1.5%, and 30-year yield exceeds 2.5%, both at multi-decade highs.
• A stronger yen could lead to risk aversion similar to August of last year.