CHINA PRESS: China Needs New QFLP Reforms - Expert

Executive Summary

• Policy Decision & Dissents: The BOJ kept rates at 0.5%, but two members dissented in favour of a 25bp hike, arguing the price target is “more or less achieved” and rates should move “closer to neutral,” highlighting stronger hawkish voices within the board.
• Governor Ueda’s Tone: Ueda remained balanced, noting “underlying inflation is approaching 2%, but the 2% level has not yet been reached” and that there is “little sign of tariff having impact on Japan’s economy,” while emphasising ongoing global uncertainty and data dependency.
• Inflation & Growth Outlook: Core inflation remains above 3% with wage growth expected to keep inflation “floating above 2%.” Risks from tariffs are seen as contained, and potential supports include “Fed rate cuts,” “AI-related investment,” and “deregulation.”
• Rate Hike Timing & Risks: Views diverge—some expect a hike in October following the Tankan Survey and LDP leadership election, while others see January 2026 as the base case. Political risks (e.g., dovish LDP candidates) and Fed-driven yen appreciation could delay tightening.
• Asset Sales: The BOJ will gradually sell ¥330bn of ETFs and ¥5bn of J-REITs annually, a pace that would take “more than 100 years” to unwind holdings. The Bank aims to “avoid losses as much as possible” and limit market disruption, though acceleration remains possible.
• See full MNI BoJ Review here

Listed companies will likely continue to move their deposits into wealth management products, with the scale reaching hundreds of billions of yuan in the next year, Yicai.com reported citing analysts. In the past year as of Sept 21, listed companies have announced a total CNY373.4 billion of entrusted wealth management, according to data by Choice Terminal. Currently, the one-year fixed deposit interest rate has dropped to 0.95%, while the average annualised yield of bank wealth management products has reached 2.12%, coupled with the general rise in major stock market indices, the newspaper said noting the significant yield gap. Investors are also increasingly adopting overseas wealth management through QDII and Southbound Connect, the newspaper added.

US Equities, just another day and another all-time high, nothing stops this train. This morning US futures have opened a little lower on the H-1b visa story, E-minis -0.15%, NQU5 -0.10%. The JPY crosses could not follow through with their upward momentum as the move stalled to end the week with no clear direction from the BOJ.

• EUR/JPY - Friday night range 173.58 - 174.17, Asia is trading around 173.90. The pair has failed to extend its break back above 174.00 and should buyers not return imminently then the risks of a retracement increase. First support seen back towards the 173.00 area.
• GBP/JPY - Friday night 199.22 - 199.93, Asia trades around 199.60. This pair also could not extend its break higher and has failed again above 200.00. Buyers need to reassert the momentum higher again soon or the probability of a deeper pullback increases. First support seen back towards the 198.00 area.
• NZD/JPY - Friday night range 86.49 - 86.96, Asia is currently dealing 86.70. The pair remains the outlier thanks to the poor NZ GDP data last week, while below 88.00/88.50 I continue to have a bias lower. Anyone looking for a vehicle to express a long JPY in the crosses should be looking here, if cross JPY moves lower this pair should lead.
• CNH/JPY - Friday night range 20.7407 - 20.8275, Asia is currently trading around 20.8200. This pair has remained above its pivotal 20.30/20.40 support. The pair continues to trade comfortably within its recent 20.40-21.00 range.

Fig 1 : NZD/JPY Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P