Early in the day, traders received Japan’s producer price index for June, which came in at 7.1%, the fastest annual rise since March 2023. The surge in wholesale inflation reinforced expectations of further rate hikes from the Bank of Japan. A former central bank official said Thursday the BOJ could raise rates more quickly, potentially pushing them above 2%.
Note that the Japanese Yen and Bitcoin have developed an unusually strong positive correlation, often moving in lockstep with the US Dollar. If this correlation holds, the rising yen could ultimately prove positive for bitcoin in general, even if BTC/JPY (and other crypto/JPY) pairs continue to lag in relative terms.
GPIF risk
Japan’s Government Pension Investment Fund (GPIF) manages approximately 277 trillion yen ($1.87 trillion) in assets, making it the world’s largest pension fund. He invests heavily in global stocks and bonds.
The Japanese government now wants the GPIF and other pension funds to invest more in local assets. Such a rotation could trigger volatility in global financial markets.
“The fund, one of the world’s largest retirement pools, held 293.4 trillion yen, or about $1.81 trillion, in assets at the end of December, maintaining roughly equal allocations between domestic stocks, foreign stocks, domestic bonds and foreign bonds,” InvestingLive analysts said in a market update.
