MUFG Research reviews Japan's anualised Q2 real GDP report.

"JGB yields are higher today despite the release of weaker than expected real GDP data today in Japan. Annualised Q2 real GDP grew by 1.1% Q/Q, down from 1.9% in Q1 and below the consensus of 2.0%. There were two clear areas of weakness – business investment which fell sharply by 1.2% Q/Q and personal consumption which was flat in contrast to the consensus for a 0.4% gain (both non-annualised). Inventories and net exports were the areas of growth," MUFG notes.

"This is certainly a weaker GDP report and will provide a challenge to the messaging from hawks at the central bank pushing for a more aggressive rate hiking path. In particular, the business investment backdrop was indicative of a corporate sector that is weaker than generally assumed based on other business sentiment data," MUFG adds.