Exports support GDP. Q1 2025 probably solid. Positive momentum in services. Further rate hike in March. Potential appreciation of yen to 140 against USD. Increasing risks for the Nikkei. Ten-year yield at 1.5%.

Key points

• Strong Japanese economic recovery supported by rising exports
• First quarter of 2025 likely to be solid
• Leading indicators supported by services
• Consumption resilient but still cautious
• Inflation rebounds to +4% again
• BoJ to raise key rates again in March
• 10-year yields approach 1.5%
• Yen-friendly yield differential
• Nikkei likely to consolidate

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