Japanese GDP growth exceeded the markets' expectation

Short comment

Japanese government announced QoQ growth of real GDP was 0.5% (expected as 0.3%) during 2Q18.

In annualization, it's 1.9%(expected as 1.4%).

But the stock market isn't reacting to the news in positive way.

Nikkei225 is off and JPY and JGB are going up about the announcement.

It reminds me of same quarter in last year, when Japanese GDP growth increased by 4%, and Nikkei 225 went down about 1%.

And same concern with this time is being addressed.

"The growth is just based on one-time domestic consumption, so there will be no consistent in the that."

But the concern was meaningless in the time, followed by rallying in NIKKEI225 +20% during left 2017 following rising S&P500.

Another concern is global trade war, which will harm Toyota, Nippon steel and many other exporters.

But as many analysts have suggested, it would be not a big problem for the Japanese corporates which have prepared continuously to the risk.

For example, Japanese automobile makers are worrying about the risk, but no lowering their expected performances based on the preparations.

Even though trade-war, Toyota and Honda had recorded more-than-expected performance during 2Q18.

But still, Japanese stock market would need little more time to start rally again, because of globally sluggish stock markets except US, and worry from the market participants.

The another different point from the past is movement of JGB which wasn't showing specific direction in the time.

Now, yield of JGB is going down with strong JPY.

It could mean concerns over end of QE is realeased much more, overlapped with strong yield of US 10y T-Note.

So I guess strong JPY is showing just one-time reaction to the markets' risk-aversion.

I still remain my opinion for USDJPY targeting 115, considering strong USD and released concerns over end of regional QE.

Additionally, my opinion for JGB is Strong considering weakened regional stock market, and over-reaction to the expansion of the band from BOJ.

Liquidities in the regional FI market are still to big to perish and providing these will be continued.

Their stance is too different from those of Fed or ECB.