Due at 2350GMT - the results of the Bank of Japan's Tankan Survey
A survey of manufacturing and service companies designed to assess business conditions in Japan
The BOJ Tankan is conducted quarterly
Tankan Large Manufacturing Index
- expected is 15, prior was 12
Tankan Large Non-Manufacturing Index
- expected is 23, prior was 20
Tankan Large Manufacturing Outlook
- expected is 14, prior was 11
Tankan Large Non-Manufacturing Outlook
- expected is 21, prior was 16
Tankan Small Manufacturing Index
- expected is 7, prior was 5
Tankan Small Non-Manufacturing Index
- expected is 6, prior was 4
Tankan Small Manufacturing Outlook
- expected is 4, prior was 0
Tankan Small Non-Manufacturing Outlook
- expected is 3, prior was -1
Tankan Large All Industry Capex
- expected is 7.2%, prior was 0.6%
As you can see, improvement is expected all round, and it's the bigger companies improving the most (Japan Inc. the bigger beneficiary of government and BOJ moves).
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The big news out of Japan over the weekend is the result of the Tokyo governor election - a huge defeat from Abe's party: Japan PM Abe's party big loss in Tokyo poll
The importance of this for policy is, in a nutshell is that it probably puts the government economic reform program (addressing long-term structural issues) back, as the focus will likely switch to maintain the economic recovery:
- Noises about delaying a balanced budget (flagged for by fiscal year 2020) will increase
- Will likely will set the stage for another delay in the sales tax hike (currently scheduled for October 2019)
- Thus, fiscal policy could stay more accommodative (more JGD issuance)
- Even more space for continued BOJ monetary expansionary policy stance (lower for longer). I'll leave considerations about how long the BoJ can maintain its current pace of balance sheet expansion (the Bank already owns nearly 40% of JGBs)
