Markets Roundup: Tariff-Driven Inflation Risks, Japan Signals Stability, Crypto Surprise
Global markets are navigating mixed signals as inflation risks persist, Asian policymakers emphasize stability, and crypto assets seize the spotlight. New analysis highlights how tariff policy could lift U.S. inflation in 2026, while Japan’s leadership underscores fiscal resilience and monetary continuity. Meanwhile, Australia’s labor data supports a steady interest-rate stance, and a major Zcash purchase ignites a sharp move in digital assets.
UBS estimates that higher tariffs would add roughly 0.8 percentage points to U.S. inflation in 2026, potentially eroding recent gains in real household income. The bank also questions the feasibility of a proposed nationwide dividend plan, noting the arithmetic challenges of funding it without significant offsets. The inflation outlook remains front of mind for investors tracking consumer spending, wage growth, and the trajectory of interest rates.
In Asia, Japan’s finance minister said it is difficult to foresee a sovereign default, reinforcing confidence in the country’s fiscal standing. Prime Minister Sanae Takaichi signaled a focus on building growth so that tax revenues rise without tax increases, while Bank of Japan Governor Kazuo Ueda reiterated the goal of achieving moderate inflation alongside sustained wage gains—key preconditions for durable policy normalization. In China’s foreign exchange market, traders expect the PBOC to set the daily USD/CNY reference rate near 7.1156, a level watched closely by currency and payments markets for clues on yuan stability.
Australia’s latest jobs report showed the unemployment rate at 4.3%, better than expectations of 4.4% and down from 4.5%, reducing the urgency for the Reserve Bank of Australia to cut rates in the near term. In crypto markets, shares of LPTX surged after the company announced a $50 million purchase of Zcash (ZEC) and a pivot to a crypto treasury strategy under the new name CYPH. ZEC rallied sharply, with traders citing renewed interest in privacy-focused assets as a potential hedge within the digital asset ecosystem.
Key Points – UBS projects tariffs could add about 0.8 percentage points to U.S. inflation in 2026, pressuring real incomes. – A proposed dividend plan tied to tariff revenues faces significant funding and feasibility challenges. – Japan’s finance minister downplayed default risk; PM Takaichi targets growth-led revenue gains without tax hikes. – BoJ Governor Ueda aims for moderate inflation and sustained wage growth as prerequisites for policy normalization. – Australia’s unemployment rate fell to 4.3% (vs 4.4% expected; 4.5% prior), easing pressure for near-term RBA rate cuts. – Markets expect the PBOC to fix USD/CNY near 7.1156; Zcash jumped after a $50 million purchase as LPTX rebrands to CYPH.
