

Yen Gains as Japan's Ishiba Vows to Stay Put; The Fed's Path Ahead
Jul 21, 2025
Clayton Triick, Head of Portfolio Management at Angel Oak Capital, and Shuntaro Takeuchi, Portfolio Manager at Matthews Asia, delve into Japan's political landscape after a significant election setback for Prime Minister Shigeru Ishiba. They discuss the implications for currency fluctuations and potential economic policies. The conversation shifts to the Federal Reserve’s interest rate strategy amidst Donald Trump’s tariffs, exploring global central banks' responses and the evolving fixed income market amidst volatility.
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Japan's Election Impact
- Japan's ruling coalition lost its majority in the upper house but only by a small margin, matching market expectations.
- This outcome complicates domestic policy and U.S. trade negotiations, requiring more multi-party negotiation.
Japan's Fiscal Direction Shifts
- Japanese government debt is high but opposing parties push for tax cuts and more spending.
- Future budgets are likely to expand amid political shifts after the election.
BOJ Focuses on Wages
- The Bank of Japan is likely to focus on wage growth before changing interest rates.
- Market consensus is split on whether BOJ will raise rates this year or next spring.