BOJ rate hike outlook and US inflation assessment (with Paul Allen)

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Allspring Global Investment 7.8
Asset Manager $500.00B
Janet Rilling 8.5

BOJ rate hike outlook and US inflation assessment (with Paul Allen)

yields

We would expect continued upper pressure on yields. We think some of that will come from issuance that's going to be required to fund fiscal stimulus and just overall increasing government debt levels. Also when we look at Japanese yields, we would expect more curve steepening. In other words, the front end is being a bit more anchored, but the long end moving up a bit more. Fiscal stimulus and government debt issuance will drive yield increases with curve steepening.

5 calls

no reliable edge (random outcomes)

9/3/2025 8:33:02 PM	short term cautious down	5 days later	-2.44%	+1.22%
8/29/2025 10:13:54 PM	medium term cautious down	20 days later	-3.13%	+1.57%

Asking about BOJ rate hike expectations and pace of tightening given strong inflation.

Paul Allen
Janet Rilling

Market expects 25bps hike today based on supportive economic data. BOJ will likely slow things down in 2026, leaning hawkish but not rushing.

There are crosswinds and global economic data impacts that could justify restraint.
Asking about yen outlook and potential move out of 150-155 range.

Paul Allen
Janet Rilling

Range-bound is base case, but increasing inflation pressure could lead to weakening trend over next 1-2 quarters.
Asking about Japanese yield outlook for 2026.

Paul Allen
Janet Rilling

Expect continued upward pressure on yields from issuance to fund fiscal stimulus and increasing government debt levels. Expect curve steepening with long end moving up more.
Asking about impact of fiscal stimulus on CPI and BOJ thinking.

Paul Allen
Janet Rilling

Stimulus is a risk and will create upward pressure on inflation metrics.
Asking about confidence in US CPI data affected by shutdown.

Paul Allen
Janet Rilling

Data integrity is questionable due to shutdown, but marginally positive as it came in cooler than expectations.

Can't put too much weight on any one number given data integrity issues.
Asking about US inflation outlook for 2026.

Paul Allen
Janet Rilling

Expect inflation to remain elevated and sticky around 3% area, causing difficulty for Fed.
Asking about Fed outlook for 2026 given slower moves in 2025.

Paul Allen
Janet Rilling

Expect Fed to lean more dovish in 2026 with new chair, but no movement until latter part of year. Expect additional rate cuts in second half of 2026.

New Fed chair will likely be more dovish but doesn't start until Q2.
Asking about US growth outlook for next year.

Paul Allen
Janet Rilling

Expect US growth 2-3%, more likely to run hotter. See momentum building from corporate America, fiscal/monetary stimulus, and capex cycle.

Corporate America has worked through tariffs successfully.
Asking if more capex means more inflation.

Paul Allen
Janet Rilling

It can, which is why view is for inflation to stay elevated and sticky around 3%.

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