Japan’s Q2 GDP was revised higher to an annualized 1.4%, reinforcing expectations that the Bank of Japan may lift rates.

Market sentiment is mixed with about a 66% implied probability of a September move and ongoing data dependence ahead of the meeting.

Treasuries eased from recent highs and long-dated yields, including the 30-year JGB, fell modestly, signaling cautious but softer pressure on long bonds.

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US export controls on advanced semiconductor equipment to China pose downside risk to TEL’s roughly 35% Chinese revenue share, potentially tightening the AI-fab cycle if restrictions tighten further.

Global markets show consolidation in Asia as investors weigh rate paths, with Europe mixed and US markets lower, influencing Asia’s mood.

Carry-trade unwinding could raise volatility across equities, bonds, and currencies, potentially weighing on the dollar.

Officials aim to avoid signaling desperation or being seen as behind the curve on inflation to prevent market destabilization.

If these dynamics persist, they could slow the economy, a view echoed by Nomura Research Institute.

Higher financing costs could cool the AI investment boom, slowing AI infrastructure growth and broader economic activity.

Mortgage market remains a swing factor for majors, with pricing discipline and demand shaped by rate expectations and household debt servicing.

Tech and AI-related stocks led declines, with notable losers including Advantest, Tokyo Electron, and SoftBank Group.