Economic Performance - Japan's GDP in Q2 exceeded expectations with a quarter-on-quarter annualized growth rate of 0.6%[10] - The manufacturing PMI for August rose to 49.9, approaching the expansion threshold, while the services PMI decreased to 52.7[2] - The unemployment rate remained stable at 2.5%, with nominal wage growth increasing to 2.2%[19][22] Trade and Production - Exports in July fell by 2.3% year-on-year, with exports to the U.S. declining by 10.1%[3] - Industrial production index in June rebounded to a year-on-year growth of 2.8%[3] - New orders for machinery in June increased by 7.6% year-on-year, indicating resilient investment[3][43] Inflation and Prices - Japan's CPI in July decreased to 2.9% year-on-year, with energy prices contributing to the decline[3][63] - The CPI for energy fell by 1% year-on-year, a drop of 4.7 percentage points from the previous month[3] - The price of rice remains high, contributing to a 11.5% increase in agricultural product prices year-on-year[3][76] Financial Markets - The Nikkei 225 index reached a historical high, increasing by 4.2% in August[4] - The 30-year Japanese government bond yield rose to 3.21%, the highest since 1999, reflecting concerns over fiscal sustainability[4] - The 10-year Japanese government bond yield increased by 7 basis points to 1.62%[4] Monetary Policy - The Bank of Japan's interest rate expectations have slightly increased to 17 basis points as of August 25[4] - The central bank maintained the policy rate at 0.5% during the July meeting, indicating a hawkish stance[5] - There are expectations for fiscal expansion due to the ruling coalition's electoral challenges[5]