JAPAN DATA: Job-To-Applicant Ratio Downtrend Continues, Risking Higher U/E Rates
Japan Oct jobless rate and job to applicant ratio figures were weaker than expected. The unemployment rate held steady at 2.6%, against a market forecast of 2.5%. The job to applicant ratio ticked down further to 1.18, versus 1.20 forecast (which was also the Sep outcome),The chart below plots this ratio, which is the white line on the chart (also inverted) against the unemployment rate. The continued trend decline in the job-to-applicant ratio points to further upside in the unemployment rate, all else equal. This will be a watch point for the authorities, given on-going focus around positive real wage gains and the importance of this in sustainably reaching the 2% inflation target. it will be hoped the government's stimulus package gives the economic a boost as we progress into 2026.
Fig 1: Japan Jobless Rate (Orange Line) & Job To Applicant Ratio (White Line, Inverted)
Source: Bloomberg Finance L.P./MNI
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JPY: USD/JPY Falters As Bessent Comments On BoJ
USD/JPY has had a dip under 152.00 in latest dealings, as US Tsy Bessent comments cross the wires (following an X post). He is re-iterating what he stated to the Japan FinMin, around BoJ policy, as part of the trip to Japan. We are sub Tuesday lows, last near 151.55/60. The 20-day EMA is further south around 151.10/20.
- Via BBG: "*BESSENT: JAPAN'S WILLINGNESS TO ALLOW BOJ POLICY SPACE IS KEY", then via Rtrs: "BESSENT IN X POST: GOVT'S WILLINGNESS TO ALLOW BOJ POLICY SPACE WILL BE KEY TO ANCHORING INFLATION EXPECTATIONS, AVOIDING EXCESS FX VOLATILITY.
- This comes after earlier in the year Bessent stated that the BoJ was behind the inflation curve.
- These latest remarks are helping push USD/JPY lower, as Bessent is essentially arguing, in our view, the government shouldn't push back on BoJ normalizing policy, as if they do it risks slipping behind the inflation curve, which will drive great USD/JPY volatility. This would likely to be the upside, which would work against US efforts to balance US-Japan trade.
MNI: UK JUL-SEP BRIGHTMINE MEDIAN PAY AWARDS +3.0% (VS +3.0% JUN-AUG)
- MNI: UK JUL-SEP BRIGHTMINE MEDIAN PAY AWARDS +3.0% (VS +3.0% JUN-AUG)
JGB TECHS: (Z5) Tilts Higher
- RES 3: 140.08 High Jun 13
- RES 2: 139.05 High Aug 4
- RES 1: 137.30 - High Sep 8 and key short-term resistance
- PRICE: 136.28 @ 15:48 GMT Oct 28
- SUP 1: 135.61 - Low Oct 08
- SUP 2: 135.39 - 1.618 proj of the Aug 4 - Sep 2 - Sep 8 swing (cont.)
- SUP 3: 134.69 - 2.000 proj of the Aug 4 - Sep 2 - Sep 8 swing (cont.)
Prices started the week well, growing the gap with next support into the 135.61 Oct 08 low. Despite this stability, prices remain inside the firm downtrend that’s dominated prices since mid-September, and prices will need to challenge resistance before signaling any broader reversal. Key short-term resistance has been defined at 137.30, the Sep 8 high. Further weakness would open 135.39 next, a Fibonacci projection.
