Core Viewpoint - Japan's GDP contracted by 1.8% on an annualized basis in Q3 2025, marking the first economic shrinkage in six quarters [1] Economic Data - Japan's real GDP decreased by 0.4% compared to the previous quarter [1] - The annualized decline of 1.8% indicates a significant downturn in economic performance [1] Trade Relations - In September, a trade agreement was reached between the US and Japan, resulting in a 15% baseline tariff on nearly all Japanese products entering the US [1] Government Response - The Japanese government is formulating a stimulus plan to alleviate the impact of rising living costs on households [1] - The recent GDP data may complicate the Bank of Japan's plans for further interest rate hikes [1]

Core Viewpoint - Germany's GDP for Q2 has been revised down, indicating a deeper economic contraction than previously estimated, which raises concerns about the country's recovery from previous downturns [1] Economic Performance - The seasonally adjusted GDP growth rate for Q2 was revised from -0.1% to -0.3%, while the unadjusted year-on-year GDP growth rate fell from 0.4% to 0.2%, against an expectation of 0% [1] - The poor performance of industrial production was highlighted as a significant factor contributing to the economic downturn [1] External Factors - The economic contraction is seen as a setback for Germany, undermining hopes for a quick recovery from the two-year recession following the outbreak of the Russia-Ukraine conflict [1] - The trade agreement reached in July between the EU and the US, which imposes a 15% tariff on most EU goods exported to the US, has faced strong criticism from the German industrial sector [1] Structural Issues - Germany's economy is also affected by global growth stagnation, geopolitical uncertainties, and long-standing issues such as an aging workforce and overly complex administrative procedures [1]

Group 1 - Canada's GDP contracted by 0.1% in April, primarily due to a 0.6% decline in the goods-producing sector, which contributes 25% to GDP [1] - The manufacturing sector, significantly impacted by U.S. tariffs, saw a 1.9% decrease in output, marking the largest drop in four years [1] - Economic forecasts suggest a potential further contraction of 0.1% in May, indicating ongoing economic challenges [1] Group 2 - Despite growth in the financial and public administration sectors, declines in manufacturing and wholesale trade sales offset these gains [1] - Economists warn that consecutive contractions may reveal the full impact of tariffs imposed by the Trump administration on Canada [1] - The Bank of Canada has cautioned that growth in the second quarter will be significantly weakened [1]

Economic Indicators - The actual GDP decreased by 0.30%, while the current dollar GDP grew by 3.50% [3] - Private domestic purchasers' actual final sales increased by 3.00%, but the import volume surged by 37.9%, significantly lowering GDP by nearly 4.7 percentage points [3] - Government spending saw a year-on-year decline of 4.6%, marking the largest drop since 1986 [3] Industry Performance - The actual value added in the private goods-producing sector fell by 2.8%, and the private services sector decreased by 0.3%, although government sector growth of 2.0% somewhat mitigated the overall decline [4] - The measure of current production profits decreased by $906 million, with a further decline of $275 million compared to previous estimates, indicating severe pressure on corporate earnings [4] Inflation Pressure - Inflation remains a significant concern, with the core PCE price index rising to 3.5%, above the expected 3.4% [5] - The domestic total purchase price index increased by 3.4%, and the PCE price index rose by 3.7%, suggesting a persistent upward trend in prices [5] Corporate Investment - May durable goods orders showed a strong increase of 16.4%, the largest since July 2014, exceeding expectations [6] - Core capital goods orders, a key indicator of business equipment investment, rose by 1.7%, indicating some positive signals in corporate investment despite declining profits [6] Employment Market - Initial jobless claims decreased by 10,000 to 236,000, better than economists' expectations, but layoffs increased, leading to a rise in the number of individuals seeking continued assistance [8] - The unemployment rate is expected to rise from 4.2% in May to 4.3% in June, reflecting instability in the job market [8] Monetary Policy - The Federal Reserve has paused its interest rate cuts, maintaining the benchmark overnight rate between 4.25% and 4.50% since December 2024, indicating a cautious approach amid economic uncertainties [8]

Group 1 - Traders have increased bets on a rate cut by the Bank of England, expecting a reduction of 52 basis points this year [1] - The UK GDP contracted by 0.3% month-on-month in April, marking the first contraction in six months, against an expected contraction of 0.1% and a previous growth of 0.2% [1]

Core Insights - Japan's economy contracted less than initially estimated in Q1, with a year-on-year GDP decline of 0.2%, better than the preliminary estimate of 0.7% [1][3] - The improvement in GDP was driven by better inventory and consumption data, with personal consumption increasing by 0.1% and corporate equipment investment rising by 1.1% [1] - Inventory changes contributed 0.6 percentage points to GDP growth, while net exports negatively impacted growth by 0.8 percentage points [1] Economic Context - The contraction in Japan's economy occurred even before the additional pressure from U.S. tariffs introduced by President Trump in April [3] - The Bank of Japan is likely to maintain a cautious stance, especially after lowering its growth forecast in the last policy meeting [3] - Bank of Japan officials are highly alert to the impacts of tariffs, with Governor Ueda warning of significant economic uncertainty and potential multi-channel effects from tariffs [3] Future Outlook - Most economists expect the Bank of Japan to delay further interest rate adjustments, with many believing that policy changes are unlikely in the coming months [3] - The next policy meeting of the Bank of Japan is scheduled for June 17 [3] - Japan is facing the impact of U.S. tariffs, including a comprehensive 10% tariff on its goods, which could rise to 24% if no trade agreement is reached by early July [3] - Specific tariffs, particularly the 25% tariff on automobiles and parts, are significantly eroding profit margins for export companies [3]

Group 1 - The CBO report indicates that Trump's global tariff plan will reduce the federal deficit by $2.8 trillion over the next 10 years, but will simultaneously slow economic growth, increase inflation, and weaken household purchasing power [1] - The report predicts that tariffs will lead to an average annual inflation rate increase of 0.4 percentage points from 2025 to 2026 [1] - The CBO's analysis assumes that the tariff policies announced by the Trump administration will be implemented long-term, despite previous court rulings questioning the legality of these tariffs [1] Group 2 - The CBO concludes that the $2.8 trillion deficit reduction will come at the cost of reduced household wealth and a contraction in the overall economy, estimating a permanent decrease in the annual GDP growth rate of 0.06 percentage points [1] - The OECD's global economic outlook report predicts that U.S. economic growth will slow to 1.5% by 2026 [2] - The CBO emphasizes significant uncertainty in its estimates due to the potential for the Trump administration to adjust tariff policies at any time [2]

Group 1: Private Economy Promotion Law - The Private Economy Promotion Law, effective from May 20, is China's first foundational law specifically addressing the development of the private economy, consisting of 9 chapters and 78 articles [2] - The law emphasizes the equal legal status of the private economy and aims to promote its healthy development, ensuring fair competition and improved investment and financing environments [2][3] - It addresses key concerns of private enterprises by establishing systems for fair competition, innovation support, and legal protections [2][3] Group 2: Market Access Barrier Cleanup - The National Development and Reform Commission, along with the Ministry of Commerce and the State Administration for Market Regulation, initiated a campaign to clear market access barriers, aiming to create a unified national market [4] - The focus is on rectifying unreasonable regulations and practices that violate market access requirements, including local regulations that hinder competition [4][5] - This six-month action is part of implementing a new negative list for market access, promoting a stable and transparent environment for private enterprises [4][5] Group 3: Employment and Economic Stability Measures - The National Development and Reform Commission announced five measures to stabilize employment and the economy, including support for employment, foreign trade stability, and effective investment expansion [6][7] - These measures are designed to enhance policy implementation efficiency and ensure that benefits reach businesses and the public [6][7] - The focus is on actionable policies that can support economic recovery and maintain social stability amid external challenges [6][7] Group 4: Manufacturing PMI Decline - The manufacturing Purchasing Managers' Index (PMI) fell to 49.0% in April, indicating a contraction after two months of expansion, with significant declines in new orders and export orders [8] - The decline is attributed to seasonal factors and a slowdown in external demand due to changing trade environments [8] - Analysts suggest that proactive macroeconomic policies are needed to bolster investment and consumer spending to stabilize the economy [8] Group 5: U.S. Economic Performance - The U.S. GDP contracted by 0.3% in the first quarter, marking the worst quarterly performance since 2022, primarily due to increased imports and reduced government spending [9] - This contraction has raised concerns about the impact of tariff policies on business and consumer confidence, leading to downward revisions of economic forecasts [9] - The economic downturn poses challenges for the current U.S. administration, affecting its credibility and public support [9] Group 6: U.S.-Ukraine Mineral Agreement - The U.S. and Ukraine signed an agreement to establish a joint investment fund, with both countries holding equal shares and management rights [10][11] - The agreement allows Ukraine to retain ownership and control over its mineral resources, addressing a key concern for Ukraine [11] - While the agreement does not explicitly mention U.S. security guarantees, it signals continued military support for Ukraine amid ongoing conflict [11] Group 7: U.S. Auto Tariff Policy Adjustments - The U.S. government announced adjustments to auto tariffs, including exemptions for imported auto parts and a small rebate for domestic manufacturers [12] - These changes come in response to widespread opposition to previous tariff policies, which could negatively impact consumer interests [12] - Despite these adjustments, uncertainties surrounding tariff policies continue to pose challenges for the automotive industry and consumer sentiment [12]