Exports to China rose to a record 1.29 trillion yen, exceeding the value of those sent to the U.S. for the first time. Shipments to the U.S. fell to 1.28 trillion yen, the 11th consecutive month of annual decline. Goods shipped to Asia advanced 12.7 percent to 3.86 trillion yen, the highest ever, and exports to Europe gained 4.1 percent, the first increase in three months.
Imports however also surged by 18.2 percent last month, the fastest pace in two years, narrowing the trade surplus to 91.1 billion yen ($830 million). Oil climbed to a record $147 a barrel in July. Japan imports virtually all of its fuel. So - as we can see in the chart below - in headline GDP terms the net trade effect is declining steadily at the moment. And bond prices rose and yields fell on the trade deficit news, with the yield on the 1.5 percent bond due June 2018 falling 3 basis points to 1.41 percent at 4:18 p.m. in Tokyo at Japan Bond Trading Co., Japan's largest interdealer debt broker. The price rose 0.260 yen to 100.776 yen. The yield is now at its lowest level since April 21.
Imports to many emerging economies continued to grow, with Russia up an annual 45.8%, Indonesia up an annual 35.4%, Vietnam an annual 27.2% and Brazil and annual 50.5%. Of course all of these are oil exporters, and imports from them all rose substantially too.
