QCP: Yen Strength, Strong Jobs Data, and Energy Shocks Test the Fed’s Policy Path in 2026

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On September 10, 2026, QCP released a macro report highlighting how regulatory policy and yen strength are reshaping the Fed’s 2026 outlook. The yen rose from 160 to 154 amid Japan’s monetary normalization and dollar weakness. Japan’s foreign exchange reserves declined by $87.8 billion in August, likely due to intervention. U.S. core PCE inflation remained at 3.3%, with energy prices still a concern. The U.S. added 162,000 nonfarm jobs in August, though 55,000 were later revised down. Energy risks persist due to low SPR levels and Hormuz constraints. QCP questions whether liquidity and crypto markets will influence the Fed’s stance amid ongoing pressures.

BlockBeats report, September 10: QCP released its macro theme report for September 10, stating that the yen recently rose rapidly from around 160 to around 154, primarily driven by the Bank of Japan’s monetary policy normalization, unwinding of carry trades, and a weaker U.S. dollar. Japan’s foreign exchange reserves decreased by $87.8 billion in August, with securities holdings declining by $87.8 billion, possibly related to funding arrangements for yen intervention; market participants should remain vigilant against further intervention risks.


Regarding inflation, QCP believes that the surge in PCE inflation this spring was primarily driven by energy prices. From February to May, non-durables contributed approximately 0.85 percentage points to the year-over-year increase in core PCE, while energy alone contributed about 0.89 percentage points; by July, the contribution from energy had declined to 0.48 percentage points. However, core PCE remains at 3.3%, indicating that the decline in energy prices has not yet fully alleviated the Fed’s concerns about broad-based inflationary pressures.


The labor market remains resilient. In August, non-farm payrolls in the U.S. increased by 162,000, significantly exceeding market expectations, while employment data for June and July were collectively revised down by 55,000; the three-month average job growth stood at approximately 71,000. QCP believes the labor market has not yet shown clear signs of slowing, providing continued support for "soft landing" trades, although household borrowing costs remain elevated.


Meanwhile, shipping through the Strait of Hormuz is restricted, and the U.S. Strategic Petroleum Reserve (SPR) stands at only about 286.6 million barrels, near historical lows, indicating that inflationary risks from energy supply shocks remain persistent. Brent crude has recently rebounded above $100 per barrel.


QCP raises a key question: If employment remains resilient while inflation is primarily driven by energy, can the Fed maintain its hold on rate cuts this year? If core inflation stays stubbornly high, expectations for policy tightening could rise again.

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