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
A hectic seven days for global markets just got even busier.
Via Reuters: Read more
Here’s some suggested bedtime reading for Japanese officials, who might be wondering why the more vociferously they threaten action to curb the yen’s growing strength, the more underwhelming are the results.
The old Aesop fable of the “boy who cried wolf” could, in fact, be a modern parable — all in nice bureaucratic speak — about the interminable threats of “appropriate action” emanating from Tokyo — the latest being a classic double-header from Masaaki Shirakawa. The Bank of Japan governor told a press briefing on Monday night that the BoJ would “take appropriate steps at the proper time” and went on to say that “the current pace of outright government bond purchase is the most appropriate”. Read more
So much for all the grand expectations that this time – just maybe this time – the Japanese meant it when they talked of “appropriate action“.
We’re really not sure “appropriate” is the – er, appropriate word. As Bloomberg reports on Monday (our emphasis): Read more
The Bank of Japan began an emergency meeting on Monday to ease monetary policy, bowing to government pressure to try to curb the yen’s recent rise to a 15-year high, reports Reuters. The yen slipped to about Y85.75 to the dollar on the news, after reaching Y84.63 on Friday.But analysts questioned whether the BoJ would be able to stem the currency’s rise, which analysts warn could delay Japan’s exit from deflation. Earlier, Bloomberg reported that BoJ governor Masaaki Shirakawa returned on Sunday to Tokyo, cutting short his stay at the Federal Reserve’s Jackson Hole conference in Wyoming by one day.
The Bank of Japan has been in rhetorical retreat when it comes to deflation in the world’s second-largest economy. After months of seeking to minimise use of the word – which Masaaki Shirakawa, BoJ governor, considers potentially “misleading and ambiguous” – the central bank has now announced it recognises deflation as a “critical challenge”. Acceptance of the language of deflation came after Japan’s new Democratic party-led government included the word in a politically sensitive economic outlook.