Research
Japan Macro &
Tourism Analysis
Yen, monetary policy, and the companies behind Japan's tourism boom
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USD/JPY, EUR/JPY & GBP/JPY — 10 Years
Daily spot rates for the three major currency pairs against the yen. USD/JPY (blue) is the global benchmark; EUR/JPY (orange) and GBP/JPY (green) reflect European purchasing power in Japan. A higher reading means a weaker yen — making Japan cheaper for foreign visitors, boosting inbound tourism revenue.
BOJ vs Fed Policy Rate
Bank of Japan (red) vs US Federal Reserve (blue) overnight policy rates, shown as stepped lines. The wide gap since 2022 — with the Fed above 5% while the BOJ stayed near zero — has been the primary driver of yen depreciation through the carry-trade mechanism.
10Y Yield Spread (JP − US)
The difference between the Japan 10-year government bond (JGB) yield and the US 10-year Treasury yield. A deeply negative spread means investors earn substantially more holding US bonds than Japanese bonds, pushing capital out of Japan and weakening the yen.
Japan CPI vs US CPI (YoY %)
Year-over-year percentage change in consumer prices. Japan (red) spent decades near zero inflation before rising sharply in 2022. The US (blue) peaked higher but is normalising faster. The divergence explains why the BOJ has been slower to raise rates than the Fed.
Japan Real Effective Exchange Rate
The BIS Real Effective Exchange Rate measures the yen's value against a basket of trading-partner currencies, adjusted for inflation. A reading below 100 means the yen is cheaper than its long-term average — Japan is currently at levels not seen since the 1970s, making it historically inexpensive for visitors.
US Treasury Yields — 2Y, 10Y & 30Y
Daily yields on US government bonds at three key maturities. The 2-year (teal) tracks Fed rate expectations, the 10-year (blue) is the global benchmark for borrowing costs, and the 30-year (red) reflects long-term inflation expectations. When the 2Y exceeds the 10Y, the curve is "inverted" — historically a recession signal.
Japan CPI — All Items, Food, Energy & Core
Monthly OECD consumer price indices for Japan, decomposed into components. All Items (blue) is the headline CPI. Food (red) has surged due to import costs and a weak yen. Energy (orange) is volatile, driven by global oil prices and government subsidies. Core ex Food & Energy (grey) isolates underlying domestic inflation pressure.
Travel Sector — 14 Equities
14 Tokyo-listed companies with direct or indirect exposure to Japan's inbound tourism boom — airlines, railways, theme parks, hotels, F&B, and online travel agencies. Forward P/E, dividend yield, and operating margin are sourced from Yahoo Finance. Market cap is in billions of yen.
| Ticker | Company | Subsector | Fwd P/E | Div Yield | Op Margin | Mkt Cap (¥B) |
|---|---|---|---|---|---|---|
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Nikkei 225 vs S&P 500 — Indexed to 100
Japan's Nikkei 225 (red) vs the US S&P 500 (blue), both rebased to 100 at the start of the window. This allows direct comparison of percentage returns regardless of absolute price levels. Japan's market has outperformed in recent years, driven by corporate governance reforms, tourism recovery, and a weak yen boosting exporter earnings.
Structural Analysis
Japan faces a convergence of long-term structural pressures — stagnant real wages, an over-leveraged central bank, a shrinking working-age population, and persistent fiscal deficits. The data below tracks the key indicators behind the thesis that the yen's weakness is not cyclical but deeply structural.
Real vs Nominal Wages
Nominal wage index (blue) vs real wages adjusted for inflation (red). When the red line falls below the blue, workers are losing purchasing power. Japan's real wages have declined steadily since 2022 as inflation outpaced pay rises — the core of the "deflationary mindset" where companies cut costs rather than raising pay.
BOJ Balance Sheet (Total Assets)
The BOJ holds roughly 600 trillion yen in government bonds — more than Japan's annual GDP. This chart shows the relentless expansion of the BOJ's balance sheet, which traps the institution: raising rates would spike its own funding costs and devastate its solvency.
Trade Balance (Exports − Imports)
Japan's trade balance has deteriorated since 2022. The weak yen inflates import costs (especially energy) while export revenue has not kept pace. A persistent trade deficit adds further downward pressure on the yen.
Government Debt-to-GDP & Fiscal Deficit
Japan's gross government debt exceeds 250% of GDP — the highest of any developed nation. The fiscal deficit (orange, right axis) shows the gap between government spending and revenue. This "crocodile mouth" of rising debt and persistent deficits limits policy options and raises the spectre of sovereign downgrade.
Demographic Decline — Working-Age Population
Japan's working-age population (15–64, blue) has been shrinking since the mid-1990s, while total population (grey) peaked around 2010. Fewer workers means lower tax revenue, less consumption, and less innovation — a structural headwind that compounds every other problem.