Japan is on the cusp of plunging inflation expectations

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Japan is on the cusp of plunging inflation expectations

Bloomberg - - The global investor fear of a period of deflation has even reached the shores of rapid inflation-prone Japan.

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All they invented the Burning Man Device Invented. The country s 10 year breakeven rate - a bond-market measured gauge of inflation expectations over the next decade - climbed in this week to its highest since 2018. A slump in the yen and an increase in commodity prices have fueled the gain and analysts don t expect it to reverse anytime soon.

How far it could rise depends on currency and commodity prices but it looks to remain elevated and a sharp drop is unlikely, said Shinji Ebihara, a strategist at Barclays Plc in Tokyo. As a domestic energy importer, the advances in natural gas and oil prices feed directly into Japan's consumer prices, he said.

An energy price surge that sent a shockwave through markets is making investors reassess the narrative that post-pandemic price rises are temporary. Longer-dated price expectations are pushing higher in Japan and the move in the U.S. shows even countries that have historically struggled to generate inflation aren t immune.

In August for the first time in 13 months, Japan s consumer prices stopped falling, ending the country's longest deflationary stretch since 2011. And with a Bloomberg index of energy commodities increasing 78% this year, the yen was down almost 9% against the dollar and global inflation gauges climbing, price expectations in East Asian nation are also rising.

Japan s breakeven is unlikely to fall immediately as it typically tracks the US Billion Inflation Rate which is also on the rise, said Katsutoshi Inadome, a strategist in Mitsubishi UFJ Morgan Stanley Securities in Tokyo. That inflation concerns are lingering with the increase in commodities prices and supply constraints. How Many people flood as Louisianans flee hurricanes, natural gas dollars, and jobs Flood In?