Ahead of the start of the week on October 5th, some rather complex things are happening in global markets.
In the US, the September employment report fell significantly short of expectations, causing expectations for additional Fed rate hikes to recede. Consequently, US stocks like the NASDAQ rose. However, the US 10-year Treasury yield remains well above 5%.
Meanwhile, regarding crude oil, the G7 decided to release 100 million barrels from emergency reserves, and on October 4th, OPEC+ kept its November production targets unchanged. Even so, Brent crude is still over $100.
In Japan, the inflation rate in Tokyo has re-accelerated, and long-term interest rates are in the 3% range. The Nikkei 225 is in the 68,000 yen range.
In other words, at the start of the week,
“Stocks are up because employment is weak”
If you only look at this, you might misread the market.
This time, I will organize it in a single flow:
US employment → Fed → Interest rates → Exchange rates → Crude oil → Corporate costs → Japanese stocks
—
① US employment slowed more than expected. Still, it cannot be called a “recession” yet.
In the US September employment report released on October 2nd, non-farm payrolls increased by only 29,000 from the previous month.
The unemployment rate was 4.2%. The US Department of Labor stated that both the number of employed persons and the unemployment rate were “almost unchanged” from the previous month, but because the employment increase was significantly lower than market expectations, the slowdown in the labor market was once again highlighted.
What is important here is not the employment report itself, but how the Fed perceives it.
When employment weakens,
Employment slowdown → Lower wage growth pressure → Lower inflation pressure → Fed finds it harder to raise rates
This flow can be considered.
In fact, following the weak employment report, expectations for an additional rate hike in October receded significantly.
If it were just this, it would be positive for the stock market.
However, the story is not that simple.
—
② US stocks rose. But the US 10-year Treasury is at 5.28%.
In the US market on October 2nd, the NASDAQ rose by about +1.2%. The S&P 500 was up +0.7%, and the NY Dow was up +0.5%.
The weak employment report supported the stock market with the expectation that “the Fed might forgo additional rate hikes.”
However, the US 10-year Treasury yield on the same day eventually rose to around 5.28%.
This is one of the biggest points to check at the start of the week.
Normally, one would imagine:
Employment is weak
→ Rate hike expectations recede
→ Government bonds are bought
→ Interest rates fall
However, this time, due to global bond selling and concerns about inflation and fiscal policy, long-term interest rates remain high. The US 10-year Treasury yield rose to as high as 5.34%, reaching its highest level in about 24 years.
In other words, currently,
“The Fed might not raise rates” and “long-term interest rates will fall” are not the same thing
This is the market environment.
This is extremely important.
—
Why does the 5% interest rate range matter for Japanese stocks?
Interest rates are the foundation for calculating corporate value.
Especially for:
AI
Semiconductors
Growth stocks
Companies with high expectations for future profits
The higher the interest rate, the more susceptible they are to its impact.
Even for a company that will earn 10 billion yen in the future, the “present value” of that 10 billion yen is different in a world with low interest rates versus a world with 5% rates.
Therefore, just because the NASDAQ rose,
Rather than judging that “all semiconductor stocks are bullish,”
You need to look at the NASDAQ rise and the US 10-year Treasury at 5.28% as a set.
For Japanese stocks at the start of the week, if you are looking at semiconductors and high-priced growth stocks, first look at US long-term interest rates.
—
③ G7 to release “100 million barrels” of emergency reserves
Another big piece of news is crude oil.
The G7 agreed through the IEA to release 100 million barrels of emergency reserves, including crude oil and diesel.
The release will begin immediately and is scheduled to be carried out over about four months.
The background to this is supply anxiety due to the situation in the Middle East.
Not only is crude oil itself tight, but the supply of petroleum products such as diesel is also strained.
Brent crude closed at $102.25 and WTI at $91.11 on October 2nd.
According to IEA Executive Director Birol, there was a moment when crude oil prices fell by about $5 after the decision to release reserves.
100 million barrels is a large number.
However, there is a point to note here as well.
—
Releasing reserves does not mean “supply capacity has increased”
If you release emergency reserves, the oil that can be supplied to the market temporarily increases.
However,
Oil fields have not increased.
Refineries have not increased.
Middle East export capacity has not recovered.
It is not that.
In other words,
It is a state of releasing inventory that was in the warehouse to the market.
Therefore, what you should look at is not just the news of “100 million barrel release,” but
How much actual Middle East export volume will recover
This leads to the next OPEC+ point.
—
④ OPEC+ “keeps” November production targets unchanged
On October 4th, major OPEC+ countries decided not to change their November crude oil production targets.
The seven major countries involved are Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman.
At first glance, it looks like
“If they don’t increase production, it’s a factor for higher crude oil prices”
However, the current problem is a bit different.
OPEC+ has been raising production targets in 2026, but due to the situation in the Middle East, actual production and exports have not reached the targets.
The August production of the seven major countries was about 25 million barrels/day. Although it increased by 630,000 barrels from July, it is about 5 million barrels/day less compared to February before the conflict.
In other words, currently,
“How many barrels OPEC+ says it will produce” is less important than “how many barrels it can actually bring to the market”
—
Crude oil at $100 is quite important for Japanese companies
Japan imports most of its energy resources.
If crude oil prices are high and the yen is weak,
High crude oil prices
↓
Rising import prices
↓
Gasoline/Diesel
↓
Logistics costs
↓
Electricity/Raw materials
↓
Corporate costs
↓
Profit margins
It spreads to corporate performance in this form.
In particular, it is necessary to check in:
Aviation
Land transportation
Logistics
Chemicals
Food
Energy-intensive industries
On the other hand,
Oil development
Trading companies
Some energy-related sectors
There is a possibility that different effects will occur.
Therefore, “high crude oil = low Japanese stocks” is not necessarily true.
The direction of profit impact is opposite depending on the industry.
This is important.
—
⑤ In Japan, prices and interest rates are becoming important once again
In the September CPI for the Tokyo metropolitan area released on October 2nd, the core index excluding fresh food was +2.7% year-on-year.
The Japanese 10-year government bond yield on the same day was 3.100%.
The dollar-yen was 157.81-85 yen as of 3:00 PM in the Tokyo market.
In other words, in Japan too,
High prices + rising interest rates + weak yen
You need to look at these simultaneously.
What is difficult for the Bank of Japan is high crude oil prices.
If crude oil prices rise, prices rise.
However, if that takes away the purchasing power of households, it is negative for the economy.
In other words,
“Raise rates because prices are high”
You cannot judge simply.
You need to see “whether it is good inflation or inflation caused by import costs.”
—
Japanese stocks on October 2nd were “weaker than the index”
The Nikkei 225 on October 2nd was:
68,309.46 yen
-647.26 yen from the previous day
-0.94%
TOPIX was also:
4,091.00
-0.99%
However, what is important here is not just the index.
On the Tokyo Stock Exchange Prime Market,
215 stocks rose
1,306 stocks fell
More than 80% of stocks fell.
In other words,
More than the figure of “Nikkei 225 -0.94%”,
Selling had spread across the entire market.
If you are looking at the start of the week, not just the Nikkei 225 figure,
You also want to check TOPIX and the number of rising stocks.
—
Connecting everything up to here
This week’s news looks scattered.
But in reality, they are connected.
US employment slowdown
↓
Fed additional rate hike expectations recede
↓
However
US long-term interest rates are in the 5% range
↓
On the other hand
Middle East situation → Crude oil over $100
↓
G7 releases reserves
↓
OPEC+ keeps production targets unchanged
↓
In Japan
Import costs + prices + weak yen
↓
Bank of Japan’s monetary policy
↓
And finally,
Corporate profits and stock prices
It reaches.
This is what it means to see news not as “dots” but as a “flow.”
—
Three things to look at first at the start of the week
If there is too much news to follow everything, I check these three things.
① US 10-year Treasury and dollar-yen
Will the US 10-year Treasury rise further from around 5.3%, or will it fall due to the employment slowdown?
This is also important for semiconductor and growth stocks.
② Brent/WTI and actual export volume from the Middle East
Will prices settle down with the G7’s 100 million barrel release?
Or will supply anxiety prevail?
It is directly linked to the costs of Japanese companies.
③ TOPIX and the number of rising stocks
Is only the Nikkei 225 rising?
Is buying spreading to banks, trading companies, machinery, and domestic demand?
Rather than “index height,”
It is where you look at “breadth of the rise.”
—
It is also connected to work and household finances
This news is not just for investors.
If high crude oil prices continue,
Work
Parts procurement
Logistics costs
Raw material costs
Production plans
Purchase prices
It affects.
Especially in manufacturing, rising fuel prices and logistics costs may lead to price revisions from suppliers.
Household finances
Gasoline
Electricity
Food
Airfares
Delivery/Logistics
There is a possibility that it will spread to these with a time lag.
In other words,
The figure of “crude oil price $100”
Is ultimately connected to our salaries and household finances.
—
[For archiving] How to look at the start of the week
There are five things to remember this time.
① US employment slowed to +29,000
→ Expectations for additional Fed rate hikes have receded.
② Even so, the US 10-year Treasury is around 5.28%
→ High stocks does not mean the interest rate problem is solved.
③ G7 releases 100 million barrels of reserves
→ Aiming to curb crude oil and diesel prices.
④ OPEC+ keeps November production targets unchanged
→ “Actual supply volume” is more important than targets.
⑤ In Japan, check prices + interest rates + weak yen
→ Affects both the Bank of Japan and corporate costs.
—
Summary | At the start of the week, look at the flow of money rather than “stock prices”
This week’s news,
“US employment was bad”
“NASDAQ rose”
“Crude oil is high”
“OPEC+ kept it unchanged”
There is no need to remember them separately.
What you should look at is,
Employment → Interest rates → Exchange rates → Crude oil → Corporate costs → Profits → Stock prices
This is the flow.
Especially currently,
“If the economy slows down, interest rates fall”
It is not a textbook market.
US employment is weak.
Even so, US long-term interest rates are in the 5% range.
Crude oil is over $100.
Japan’s long-term interest rates are also in the 3% range.
If this combination continues, there will be quite a large difference depending on the company.
Therefore, at the start of the week,
After “What is the Nikkei 225?”
Interest rates?
Dollar-yen?
Crude oil?
TOPIX?
How many stocks are rising?
Look at this much.
That is all
