Early today, traders received Japan’s producer price index for June, which came in at 7.1%, the fastest annual increase since March 2023. The rise in wholesale inflation reinforced expectations of further rate hikes from the Bank of Japan. A former central bank official said Thursday that the BOJ may raise interest rates faster, 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 that correlation holds, yen rebounds could ultimately prove positive for bitcoin overall, even if BTC/JPY (and other crypto/JPY) pairs continue to lag in relative terms.
The GPIF risk
Japan’s Government Pension Investment Fund (GPIF) manages about ¥277 trillion ($1.87 trillion) in assets, making it the world’s largest pension fund. It invests heavily in global stocks and bonds.
Now the Japanese government wants the GPIF and other pension funds to invest more in local assets. Such a rotation can trigger volatility in global financial markets.
“The fund, one of the largest pension pools in the world, had 293.4 trillion yen, or about $1.81 trillion, in assets at the end of December, maintaining roughly even allocations across domestic stocks, foreign stocks, domestic bonds and foreign bonds,” analysts at InvestingLive said in a market update.
