Possible recession in the 4th quarter. Rebound in inflation linked to the fall in the currency. Contraction in real household income. Monetary policy still expansionary. Yen's decline falters. Less positive conditions for the Nikkei.

Key points

• A much more dramatic 3rd quarter than expected
• Possible recession at the end of the year in Japan
• Significant deterioration in leading indicators
• Persistent contraction in real household income
• Further decline in foreign trade
• Temporary rebound in inflation?
• BOJ monetary policy still accommodative
• Yen yields still unattractive
• Interest rate differentials still unfavourable to the yen
• Satisfactory growth in listed company profits

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