Yen Continues to be Hammered

The yen broke through the 124 figure as carry trade continues on a large scale. Stock market declined on speculation that the rise in the bond yields might significantly affect the profits of real estate and insurance companies. The Bond yields fell most of the day on speculation that people will shift money from the stock market.


[B]Japan?s trade surplus rose for 7th month in a row:[/B]
According to the Finance ministry data Japan?s merchandise trade surplus rose for a seventh month in a row in May despite imports hitting a record high for the month while the surplus with the US dropped. Exports gained 15.1 percent to 6.565 trillion yen.
Source: Daily Times\06\22\story_22-6-2007_pg5_23
[B]Japan Airlines to Speed Up Job Cuts: [/B]
Japan Airlines Corp. said that it will cut about 4,300 jobs a year earlier than announced in February to speed up the company’s revival and reduce costs. The move suggests JAL is feeling greater urgency to shape up its business. The job reduction plan will help it trim labor costs by $406.5 million a year which is a significant savings for a company struggling under heavy fuel costs.
Source: Forbes
[B]Japan May supermarket sales down 0.6 pct yr-on-yr, 17th straight month of fall:[/B]
According to the Japan Chain Stores Association sales at supermarkets open for at least one year dropped 0.6 pct in May from a year before to 1.169 trillion yen, falling for the 17th month in a row, dragged down by sluggish sales of clothing. Sales in April were also down 1.0 pct year-on-year. Supermarket sales have dropped for 38 of the last 39 months
Source: Forbes
[B]Currency Market:[/B]
The yen reached a record low versus the Euro and New Zealand dollar. It dropped 0.4 percent against the dollar and crossed the 124 mark. According to Bloomberg Japanese finance companies will market more than 1.5 trillion yen of foreign currency investment trusts before the end of this year. Many believe the yields decline because of selling to protect options that would become worthless should currency rise.

[B]Stock Market:
[/B]Japanese stocks plummeted mainly due to the fall in the shares of property developers and insurers on speculation that rising bond yields might contain companies? earnings. Measures tracking real estate and insurance companies declined 2.8 percent respectively. The Nikkei 225 fell 51.67 to 18,188.63. For the week, however; Nikkei gained 1.2 percent. Semiconductor stocks continue to rise since Wednesday as prices of dynamic random access memory continue to surge.

[B]Bond Market:[/B]
Japan?s 10-year bonds rose on speculation that a decline in local stocks might boost demand for government debt. The yield dropped 1.5 basis points to 1.895 percent as of 3:00am New York time. The price gained 0.124 yen to 99.077. In this entire week yield dropped half a basis point.