Japan’s Inflation Hovers Well Above BOJ’s Goal Even As It Slows

Key points:

The U.S. Department of Agriculture's plan to close its flagship laboratory near Washington, D.C., could undermine research on pests, blight and crop genetics crucial to American farms, according to lawmakers, a farm group, and staff of the facility.The USDA has already lost thousands of research staff to PresidentDonald Trump's effort to shrink the federal government, even as Agriculture Secretary Brooke Rollins has said farm research is a pillar of national security.

Rollins said in July that the USDA will close the Beltsville Agricultural Research Center, which occupies nearly 7,000 acres in the Maryland suburbs outside Washington, as part of an agency reorganization effort that will also move roughly half its Washington-area staff to hubs in North Carolina, Utah and elsewhere.The agency has said it is closing BARC and several other USDA buildings because of costly necessary renovations and underutilized space. Workers at BARC in 2023 filed whistleblower complaints about unsafe working conditions there.

But critics of the plan to close BARC say it could backfire by interrupting the facility's ongoing research, and by pushing the scientists conducting it to resign."It is unlikely that senior scientists of this caliber with mature research partnerships and rich professional lives will simply move somewhere else," said Donnell Brown, president of the National Grape Research Alliance, which depends on BARC research into vine stress and water usage.

U.S. Senator Chris Van Hollen, a Maryland Democrat, also slammed the plan.

"You have a lot of people who have invested their time and effort in research for farmers across the country, and this plan would destroy that ongoing research," he said.Three staff at the facility, who requested anonymity out of fear of retribution, said the co-location of many labs at BARC allows for economies of scale and cost savings, and that the proximity to Washington enables researchers to easily brief lawmakers or other parts of the USDA.

A USDA spokesperson said the $500 million required to modernize the BARC facility, plus another $40 million in annual maintenance, was not a wise use of taxpayer funds and that the agency's other laboratories could house BARC research.Rollins said in a July memo outlining the relocation effort that the BARC facility would be closed over several years to avoid disruptions to critical research.

The USDA on July 25 told the House of Representatives and Senate agriculture and appropriations committees that it did not have data or analysis underpinning its reorganization plan to share with members of Congress or their staff, according to a letter sent from Democrats on the House Agriculture Committee to Rollins on August 14."Ostensibly they’re saying it would save money, but I haven’t seen any study that suggests that’s the case," said U.S. Representative Glenn Ivey, whose Maryland district contains the BARC site.

Source: TradingView

Key Takeaways:

DBS Bank, Singapore's largest, has announced issuing tokenized structured notes on the Ethereum blockchain, enhancing accessibility for institutional investors.This initiative reflects DBS's trust in public blockchain technology, potentially increasing Ethereum's institutional usage and impacting digital asset markets significantly.

DBS Bank, Singapore's largest financial institution, has begun issuing tokenized structured notes on the Ethereum blockchain, shifting to public networks from previous permissioned systems. This decision expands access to previously exclusive investment vehicles.Li Zhen, Head of Foreign Exchange and Digital Assets at DBS, highlighted the growing demand for digital assets among institutional investors as a driving factor behind this transition. This marks a significant move for DBS in the crypto finance space.

The reduction of entry barriers, enabling a minimum investment of $1,000, significantly impacts the structured notes market. The involvement of Ethereum implies broader adoption of blockchain technology in financial products.Financial markets may observe increased liquidity and trading volumes as these tokenized notes become available on licensed Singapore digital exchanges like ADDX and DigiFT. This could lead to notable shifts in market dynamics.

DBS's shift could inspire other institutions to adopt similar tokenization strategies. The ongoing use of Ethereum may affect the network’s market position, fostering greater institutional use.Potential outcomes include stronger regulatory frameworks to support such innovations. The success of these notes could elevate Ethereum's profile in institutional finance, bridging traditional and digital markets more effectively.

Li Zhen, Head of Foreign Exchange and Digital Assets for Global Financial Markets, DBS Bank, "The launch of crypto-linked notes aims to meet growing institutional demand for digital assets," referencing DBS’s ongoing tokenization efforts since 2021.

Source: CryptoSlate

On August 20, the United Kingdom announced new sanctions targeting the Kyrgyz financial system and crypto networks London says have been used by Russia to avoid sanctions stemming from the war in Ukraine. The U.K.’s sanctions come on the heels of new U.S. sanctions against some of the same actors.This is the latest move in an ongoing battle that often resembles a game of sanctions whack-a-mole. When one avenue is shut off – for money laundering, or dealing with sanctioned entities and industries – another pops up.

In an interview with state media outlet Kabar, Kyrgyz President Sadyr Japarov accused Western nations of politicizing the economy with sanctions, claiming that there was no evidence that Kyrgyz financial institutions were involved in sanctions evasion.According to an August 20 press release from the U.K’s foreign ministry, “With sanctions continuing to bite, Russia has turned to the Kyrgyz financial sector to channel money through opaque financial networks, including through the use of cryptocurrencies.”

The new U.K. sanctions take aim at the Kyrgyzstan-based Capital Bank and its director, Kantemir Chalbayev, claiming that Russia uses the bank “to pay for military goods.” Other new sanctions targets included CJSC Tengricoin, the operator of the Meer cryptocurrency exchange; Old Vector LLC, which reportedly launched the A7A5 cryptocurrency for cross-border payments; Altair Holding, a Luxembourg-registered company previously owned by George Rossi (a Ukrainian national sanctioned in 2024); Leonid Shumakov, believed to be the director of A7A5; and Zhanyshbek Uulu Nazarbek, reported by local media in December 2024 to be the head of Kyrgyzstan’s state trading company.

The new U.K. sanctions also target Grinex. Earlier in August, the U.S. Treasury Department announced sanctions against Grinex and a number of associated companies in Russia and Kyrgyzstan, referring to Grinex as the successor of Garantex.

In late June, the Financial Times exposed a crypto laundering scheme involving a Russian ruble-backed token, A7A5, traded primarily through Grinex, a cryptocurrency exchange widely believed to be the successor of Garantex, a previous Russian platform sanctioned in April by the U.S. and March by the EU. In March, the U.S. announced “a coordinated action with Germany and Finland to disrupt and take down the online infrastructure used to operate Garantex.”In comments to the Financial Times, Grinex said it was unrelated to Garantex.

In July, Brett Erickson, managing principal at Obsidian Risk Advisors, wrote in an analysis for The Diplomat that:

The scale and velocity of A7A5’s flows, paired with Grinex’s structural similarity to Garantex, suggest that this was not opportunistic activity, but a continuation of an already-rehearsed sanctions bypass framework. What mattered more than the sum, however, was the architecture behind it. Informal agent networks, multi-hop transfers, and front companies disguised as digital finance entities were used to quietly move rubles out of the Russian economy and into offshore wallets, using Kyrgyzstan’s regulatory ambiguity as a shield.

To Western analysts, A7A5 may read as an isolated event. It isn’t. It is the latest node in a sanctions evasion playbook that has been in live development since 2014, and in full operational swing since the first wave of post-invasion sanctions from the Russo-Ukrainian War in 2022.

The Financial Times report claimed that A7A5 had moved around $9.3 billion through Grinex in four months. The U.K. sanctions announcement cited the same figure.

Last week, Chainanalysis said that “[t]hrough the end of July 2025, A7A5 has processed over $51.17 billion in volume.”

In the face of the additional sanctions targeting Kyrgyz banks and nationals, Japarov was firm in his denials. To Kabar, he said that although the U.S. had imposed sanctions against a different Kyrgyz bank, Keremet Bank, in January, “at the same time, they were unable to present a single fact of violation. And they will not be able to, because there are no such facts and there never were.” The U.K. sanctioned Keremet in February.Japarov said he had suggested an independent audit to the U.S. ambassador, but the idea was refused. Later in the interview, he suggested going directly to President Donald Trump and Prime Minister Keir Starmer with his complaints. “Maybe they are not getting the message. There is no need to politicize the economy.”

“But we already know very well where this data comes from,” Japarov continued. “It comes from local NGOs and our internal ill-wishers who send anonymous false information there.” Japarov offered no evidence to support his claim. He went on to suggest that Kyrgyzstan was being targeted because its economy was doing so well.

Source: The Diplomat

One month after unexpectedly sliding into contraction for the first time in 2025, moments ago the S&P Manufaturing PMI even more unexpectedly soared from 49.8 to 53.3, not only smashing expectations of another decline to 49.7 and printing well above the highest economist forecast and in fact printing 7-sigma above the median estimate...

... but was the highest print since May 2022! According to S&P's PMI report, the surge signaled "a renewed improvement of factory business conditions after a brief deterioration in July."

At the same time the S&P Services PMI declined from last month's red hot 55.7 to 55.4, but still beat estimates of 54.2. As a result, the composite PMI of US business activity grew at the fastest rate recorded so far this year in August, rising to 55.4 from 55.1, matching the previous post-covid high from Dec 2024 and adding to signs of a strong third quarter. Output has now grown continually for 31 months, with the latest two months seeing the strongest back-to-back expansions since the spring of 2022.

According to the report, growth was seen across both manufacturing and service sectors of the economy. Hiring also picked up. Most notably, job creation reached one of the highest rates seen over the past three years as companies reported the largest build-up in uncompleted work since May 2022.

Some more details:

There was more good news when it comes to jobs: employment rose for a sixth successive month, with the pace of job creation hitting the highest since January (and one of the strongest rates seen for over three years). Service providers took on staff at the fastest pace for seven months while factory job gains reached the highest since March 2022. Companies largely took on additional staff in response to rising backlogs of work. Uncompleted orders rose for a fifth consecutive month, rising in August at a pace unsurpassed since May 2022 reflecting stronger demand and near-term capacity constraints at some companies.

There were some concerns on the price side, with tariffs reported as the key driver of further cost increases in August. Companies across both manufacturing and service sectors collectively reported the steepest rise in input prices since May and the second-largest increase since January 2023. Rates of increase accelerated in both sectors. While the manufacturing cost rise was especially large, being the second-steepest since August 2022, the service sector increase was the second-highest since June 2023. Average prices charged for goods and services rose at the sharpest rate since August 2022 as firms passed higher costs on to customers. Although goods price inflation cooled slightly for a second month in a row, it remained among the highest seen over the past three years. Service sector price inflation meanwhile was the sharpest since August 2022.

Business confidence in the outlook also improved but remained much weaker than seen at the start of the year as companies reported ongoing concerns over the impact of government policies, especially in relation to tariffs. Tariffs were again widely cited as the principal cause of sharply higher costs, which in turn fed through to the steepest rise in average selling prices recorded over the past three years.

Commenting on the report, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said that the "strong flash PMI reading for August adds to signs that US businesses have enjoyed a strong third quarter so far. The data are consistent with the economy expanding at a 2.5% annualized rate, up from the average 1.3% expansion seen over the first two quarters of the year."

“Companies across both manufacturing and services are reporting stronger demand conditions, but are struggling to meet sales growth, causing backlogs of work to rise at a pace not seen since the pandemic-related capacity constraints recorded in early 2022. Stock building of finished goods has also risen at a survey record pace, linked in part to worries over future supply conditions."

“While this upturn in demand has fueled a surge in hiring, it has also bolstered firms’ pricing power. Companies have consequently passed tariff-related cost increases through to customers in increasing numbers, indicating that inflation pressures are now at their highest for three years."

As a result, the economist concludes that the "rise in selling prices for goods and services suggests that consumer price inflation will rise further above the Fed’s 2% target in the coming months. Indeed, combined with the upturn in business activity and hiring, the rise in prices signaled by the survey puts the PMI data more into rate hiking, rather than cutting, territory according to the historical relationship between these economic indicators and FOMC policy changes.”

In other words, the report coming unexpectedly strong, may be just an attempt by the traditionally anti-Trumpian S&P to pressure the Fed into maintaining a hawkish bias even as the labor market - at least as measured by most other 3rd parties - continues to deteriorate.

Source: Zero Hedge

Key points:

Japan's core inflation slowed for a second straight month in July but stayed above the central bank's 2% target, keeping alive market expectations for another interest rate hike in the coming months.

The nationwide core consumer price index (CPI), which excludes fresh food items, rose 3.1% in July from a year earlier, government data showed on Friday, faster than a median market forecast for a 3.0% gain.

The rise was smaller than the 3.3% increase in June, due largely to the base effect of last year's rise in energy prices, which came from the termination of government subsidies to curb fuel bills.

A separate index that strips away both fresh food and fuel costs - closely watched by the BOJ as a measure of domestic demand-driven prices - rose 3.4% in July from a year earlier after increasing by the same rate in June.

Rising food and raw material costs have kept Japan's core inflation above the Bank of Japan's 2% target for well over three years, causing some BOJ policymakers to worry about second-round price effects.

The BOJ last year exited a decade-long, massive stimulus and raised short-term interest rates to 0.5% in January on the view Japan was close to durably hitting its 2% inflation target.

While the bank revised up its inflation forecasts last month, Governor Kazuo Ueda has stressed the need to tread cautiously on further rate hikes, due to an expected hit to the economy from U.S. tariffs.

The Japanese economy has been showing resilience even though sweeping U.S. tariffs are dragging down exports.

Last week's unexpectedly strong second-quarter gross domestic product data, combined with a U.S.-Japan trade deal struck last month, has fuelled market expectations that a tariff-driven recession will be averted - bolstering the case for another rate hike later this year.

Some analysts also point to Washington's pressure for more rate hikes, following rare and explicit comments from U.S. Treasury Secretary Scott Bessent who said the BOJ was "behind the curve" on policy.

The latest Reuters poll showed 63% of economists surveyed this month expect the central bank to raise base borrowing costs to at least 0.75% from 0.50% by the end of this year, an increase from 54% in last month's poll.

Source: Reuters

Source: Reuters