Posts tagged 'BoJ'

Tin hat time in Japan?

That’s the 10yr going negative for the first time, becoming the first G7 country to do so. Read more

Japanese banks don’t like something

Macro Man might just be on to that something here…

That green line heading down and away from the rest (which you shall see more easily after some enlarging via clicking) is the performance of Japan’s banks since the BoJ went negative last week.

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Negativity all the way down

Not sure how many more pixels you’ll tolerate us spilling on the BoJ’s move negative, but this from Simon Derrick at Bank of New York Mellon seems worth your time. With our emphasis, and pars broken up for online readability:

Whether or not the BOJ’s decision was a direct reaction to the ECB’s decision to potentially push even further into negative territory doesn’t really matter. Indeed, it doesn’t even really matter whether or not the BOJ was trying to weaken the JPY by their move (in our opinion plausible deniability remains a key tool for central bankers).

What does matter is that four of the eight members of G8 (France, Germany, Italy and Japan) now have an official negative deposit rate while Canada continues to suffer the impact of collapsing oil prices (Russia, which has had its membership suspended, suffers from the same issue of course).

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Er, what lower bound? And $5.5tn worth of negative nuts

ICYMI, and on the back of the BoJ going negative, “the universe of DM government bonds trading with a negative yield rose to a record high of $5.5tr, or 24% of the JPM Global Government Bond Index,” according to JPM.

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How much yen can you fit in a cubic metre?

If the BoJ and Mr Kuroda are thinking about storage costs – after taking interest rates to minus 0.1 per cent and saying they “will cut the interest rate further into negative territory if judged necessary” — this might be useful.

From Oxford Econ’s Gabriel Stein & Ben May:

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That was then, this is now: BoJ and negative rates edition (UPDATED)

Bank of Japan Governor Haruhiko Kuroda said he is not thinking of adopting a negative interest rate policy now, signalling that any further monetary easing will likely take the form of an expansion of its current massive asset-buying programme.

- Reuters, Jan 21

The Bank of Japan has adopted negative interest rates in their first benchmark rate move in five years, but has also chosen not to expand its quantitative and qualitative easing programme beyond its current level of buying Y80tn assets a year.

The BoJ has adopted a benchmark rate of -0.1 per cent, from a previous level of 0.1 per cent. It is the first time they have moved interest rates since October 2010….

The BoJ also indicated it has not ruled out further imminent easing, saying “it] will cut the interest rate further into negative territory if judged as necessary.”

- Now.

Wait, what? Read more

For the world is cold and less full of inflation

So charted by Citi.

As they say, the coolness of global inflation is not just an energy price story:

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Your Abe put [updated]

Since we can’t put charts in the Cut without borking format for a bunch of readers, here’s what a surprise commitment from the Bank of Japan to raising the monetary base by around Y80tn a year from Y60-70tn, a tripling of annual purchases of ETFs and REITS, and a certain (probably coordinated) GPIF rumour doing the rounds will do to Japanese equities and the yen.

More on the GPIF rumour and the positive and negatives of this latest Kuroda splurge near the bottom.

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BoJ: you know we said “about” two years, right?

The Bank of Japan has bought bonds, bills, stocks and property since embarking on its radical monetary easing programme last April.

Now it’s buying time. Read more

Kuroding confidence

Optimism from the mouth of Haruhiko Kuroda, in the FT:

At this stage, we are not thinking about any other policy tools since we are on track and we are likely to achieve the 2 per cent inflation target within the two-years time band.

But there’s a slight problem. From the pens of Credit Suisse (via our inbox):

Neither financial market participants nor the general public appear to have any real confidence in the BOJ’s ability to achieve +2% inflation. The expected inflation rate priced into the JGB linker market points to a steady state closer to +1% after the April 2014 consumption tax hike (Exhibit 1), while households appear to be anticipating even weaker inflation over the coming year.

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On the virtuous circle of exporting deflation

We thought the following from TD Securities’ Richard Gilhooly on Tuesday was a rather insightful way of looking at the whole BoJ effect (our emphasis):

While it remains a contentious point and as yet unproven, Japan’s devaluation and soaring Nikkei vs slumping DAX or Bovespa has all the hallmarks of a competitive devaluation. While competing factions debate the Monetary expansion/QQE, versus beggar-thy-neighbour interpretation, one positive aspect of the Japanese Yen collapse and fear of exported deflation has been collapsing commodity prices with weak growth in export countries (China, Germany, S Korea) and a stronger USD helping a supply story (crude inventories at 22yr highs) and weak demand send commodities into a bear market.

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Presenting… the new BoJ [Updated]

At least, markets are sure it’s a new dawn for Japanese monetary policy. And yeah, we know: this sort of initial euphoria has fizzled out before — but the new Bank of Japan governors appear to have actually come through with the goods:

BoJ statement pic

Click screenshot for the statement. More to come soon, and in the meantime, see this from the FT’s Ben McLannahan: Read more

Expectations reconsidered at the BoJ

Two charts for your morning consideration:

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Expectations management for the BoJ

We’ve used that kind of header before… but Abe is forcing us to crack it out again. From the FT on Tuesday:

Japanese Prime Minister Shinzo Abe has said that the 2 per cent inflation target he imposed on the Bank of Japan may not be reached within two years…

In an exchange with Seiji Maehara, an opposition politician and former economy minister, Mr Abe said the BoJ should not pursue the inflation target “at all costs”.

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Japan’s DPJ not so sure about Iwata… and possibly Kuroda, too

Excitement about an imminently more pro-active BoJ might take a bit of a tumble on this news out of Tokyo late yesterday.

From the Japan Times:

The Democratic Party of Japan said Tuesday it will support Asian Development Bank President Haruhiko Kuroda as the next Bank of Japan governor but will oppose Gakushuin University professor Kikuo Iwata’s nomination as one of the two BOJ deputy governors because of his extreme stance on monetary policy.

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Don’t kill the old, pander to them

“Whatever we can”, you say? Encouraging words from BoJ governor nominee Kuroda over the weekend (even if comparisons with Mr Draghi are overblown). If Cullen Roche is correct, what happens in Japan over the next year or many could change the future of economic policy. So it’s worth spending a bit more time on what Kuroda’s “can” might actually be.

We’ve argued already that much of the low-hanging fruit of expectations and verbal intervention has already been plucked. Read more

Muto ado about something

It’s the latest in Japanese swings and roundabouts, pushing the yen higher and JGB yields and stocks lower… What to blame? What to blame?

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Moving targets and a lack of self-belief at the BoJ

Oh look, it’s the Abe effect. How exciting. From Reuters:

RTRS – BOJ TO MULL SETTING 2 PCT INFLATION TARGET AT JAN 21-22 MEETING, DOUBLE CURRENT PRICE GOAL – SOURCES

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The second coming of Abe… confirmed

The landslide win for the Shinzo Abe-led Liberal Democratic party in Japan at the weekend pushed the Japanese yen to its weakest level against the dollar since April 2011 (inverted chart, don’t ya know):

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Cut out’n'keep guide to prospective new BoJ governors

Japan’s election on December 16 is going to be a doozy.

It’s probably the first election where the role and independence of the central bank is a key issue, says Gavyn Davies. There’s also rather a lot of yen short positions that are riding, at least in part, on the outcome — IMM data out over the weekend shows net shorts have built to levels not seen since 2007. Read more

Hey, Japanese government – leave the BoJ alone (says Koo)

The Bank of Japan’s unprecedented joint statement with the Japanese government after the central bank’s October meeting raised eyebrows around the world. The BoJ was already widely seen as having come under increased political pressure in recent months as the country’s economy had slowed; so what did the joint statement mean?

The statement contained a couple of key declarations: “The Bank strongly expects the Government to vigorously promote measures for strengthening Japan’s growth potential”, and “The Government strongly expects the Bank to continue powerful easing as outlined in section 2 until deflation is overcome.” Read more

Sharp blunted, and it’s not alone

So, Fitch junked Sharp (to ‘B-’ from ‘BBB-’) and the century-old technology company admitted there is “material doubt” about its ability to stay in business. According to the FT, it expects to end the financial year to March with a net loss of Y450bn ($5.6bn), worse than the Y250bn loss it had predicted in August. Last year it lost Y396bn.

And one line in the rating agency’s critique really stuck out:

Fitch does not foresee any meaningful operational turnaround in the company’s core business over the short- to medium-term due to deterioration in its market position as well as in price competitiveness as a result of a high Japanese yen.

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Expectations management at the BoJ

Here’s a trend for ya:

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Japan’s very own fiscal cliff

And this one might prove more precipitous than its famous US cousin.

From the FT’s Ben McLannahan:

In an echo of worries in the US over the $600bn of spending cuts and tax increases due to take effect in January – the so-called fiscal cliff – Japanese politicians are at loggerheads over a bill that would allow the government to borrow the Y38.3tn ($479bn) it needs to finance this year’s deficit.

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A currency war campaign plan for the BoJ

(Chart from RBC Capital Markets.) Read more

The BoJ’s feud-driven asset purchase extension

Japan’s finance minister Jun Azumi was pretty clear about how the country might respond after the FOMC’s decision last week threatened to push the yen higher against the dollar. Today the BoJ made good on the threat, announcing it would increase its asset-purchasing programme to ¥80 trillion ($1.01tn) from ¥70tn.

The yen did this: Read more

Yen weirdness du jour

The euro dropped below €1.23 as payrolls missed hard and then the yen… jerked:

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Dear Bank of Japan: So you tried the easing thing a gazillion times…

… might it be time for something (relatively) new? One question that keeps on popping up is, what is stopping Japan from adopting a currency peg a lá the Swiss National Bank? If repeated easing seems to have no real effect why not get explicit?

Essentially, there is little chance of an explicit floor being put in place due to: Read more

Kicking a central bank when it’s down

Japan eased… the yen appreciated. The Bank of Japan may be a bit sad. Is now really the time to rub salt into wounds by reminding the BoJ of the futility of its easing actions – at least where the yen is concerned?

Nomura’s Yujiro Goto certainly thinks so (click charts to enlarge): Read more

Another repeat from the BoJ

We love the BoJ’s no-nonsense approach to amendments. If you’re doing something wrong, or not doing enough, just cross it out and change it:

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