All eyes will be on the market reaction to the U.S. GDP report this morning.

I think you’d be better rewarded by watching Japan.

I don’t think the U.S. GDP number for the quarter that ended way back on June 30 addresses any of the market’s real hopes or fears. The question investors’ are asking is “Will growth slow in the second half of the year?” A backward looking GDP number doesn’t answer that. And it’s all too easy to rationalize the number no matter what side of the growth debate you’re on. If it’s low, you say “Doesn’t prove anything about the second half.” If it’s high, you say, “Wait until we see second half numbers.”

By the way, the report released at 8:30 ET today, July 30, said the U.S. economy grew at a 2.4% annualized rate in the second quarter. That is almost exactly the 2.5% expected by economists. The government also announced that first quarter growth had been revised upward to 3.7% from 2.7%.

But Japan? Now that’s a different story. In overnight news the country delivered surprising—and this is surprising bad—economic news. And because it was unexpected the news roiled markets across Asia.

In Japan unemployment unexpectedly rose for a fourth straight month to a seven-month high of 5.3% in June. Industrial production fell by 1.5%, the most in a year. Economists had been expecting a 0.2% gain.

And perhaps most ominously for this deflation-shocked country, consumer prices, excluding food, fell by 1% from June 2009. 

And the market’s reaction?

In Tokyo stocks fell but the yen climbed as investors decided that less risk was good. The Japanese currency climbed to 86.36 to the dollar, the highest level since December 1. The Nikkei 225 index dropped 1.5%. 

Stocks fell across Asia. The MSCI Asia Pacific Index declined by 0.5%. Korea’s Kospi Index dropped by 0.8% and the Hong Kong Hang Seng Index fell by 0.3%.