Japan's IP on track to turn down q/q in Q2, in line with real exports

The biggest downside surprises relative to Japan's previous month's METI forecast indices were in general machinery and electronic parts/devices, which also have the highest export ratios among all industries. 

"Industrial production, which undershot expectations in May and was on track to decrease 1.4% q/q in Q2 based on the METI forecast index for June", says Barclays.

The steepest drop was in transport equipment, reflecting slack demand not only overseas but also domestically. In this context, the inventory-shipment ratio continued its gradual rise.