Japan's real wages rise for fourth month, strengthening the BOJ rate-hike case

Japan's April data showed stronger-than-expected wage and spending momentum, bolstering the Bank of Japan's case for a rate hike at its June 15-16 meeting. Real wages rose 1.9% year-on-year (fourth consecutive gain), nominal total cash earnings jumped 3.5% YoY (fastest since Dec 2024) and base salaries increased 3.4% YoY. Household spending beat forecasts, down just 0.5% YoY but up 1.6% month-on-month. A 7.4% surge in special payments (one-time bonuses) and easing inflation used to deflate wages (1.5%) underpin the wage-price dynamics the BOJ wants to see. Markets will likely treat this as increasing the probability of BOJ tightening, supportive for the yen and therefore negative for USDJPY into the June policy meeting.