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☆ BOJ's Ueda says yield control will end when price goal achievement foreseen
▼ + stars: | 2023-05-09 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

"We're seeing some positive signs in trend inflation, including inflation expectations," the BOJ chief said. Under yield curve control (YCC), the BOJ sets a short-term interest rate target of -0.1% and caps the 10-year bond yield around zero as part of efforts to durably hit its price goal. It also announced a plan to review its past monetary policy moves, laying the groundwork to gradually phase out his predecessor's massive stimulus programme. Ueda said the review will scrutinise the benefits and side effects of past monetary policy, including by conducting workshops with private academics. "We will take necessary policy steps at each of our rate reviews, with an eye on financial and price developments, even while we conduct the review," Ueda said.

☆ Japan's spending downturn, wages decline heighten pressure on economy
▼ + stars: | 2023-05-09 | by ( Kantaro Komiya | ) www.reuters.com time to read: +2 min

TOKYO, May 9 (Reuters) - Japan's consumer spending unexpectedly fell in March at the fastest rate in a year, while real wages marked a twelfth month of decline on persistent inflation, highlighting the challenges facing the economy in mounting a strong post-COVID revival. Household spending fell 1.9% in March from a year earlier, the data showed, against economists' median forecast for a 0.4% rise and following a 1.6% gain in February. It marked the biggest decline since March 2022's 2.3%, when Japan was still trying to curb the spread of coronavirus. For the full fiscal year 2022 that ended in March, household spending rose 0.7%, slowing from 1.6% expansion in fiscal 2021. Separate data showed Japanese real wages falling 2.9% in March, marking the full year of declines that started in April 2022 on decades-high consumer inflation.

☆ Dollar on rates-watch as traders wait on loans data
▼ + stars: | 2023-05-08 | by ( Tom Westbrook | ) www.reuters.com time to read: +3 min

The yen slipped slightly, reflecting Friday's move higher in U.S. bond yields that followed strong jobs data. "But for the time being, the market is likely to run with the theme of a peak in Fed rates justifying a clear peak in the dollar." The U.S. dollar index dropped for a second week in a row last week, losing about 0.4%. "There is a risk that regional bank issues could escalate, posing a broader risk to the financial system and taking the dollar (higher)," said Standard Chartered's head of G10 FX research, Steve Englander. "We think that the escalation of debt-ceiling concerns is a more likely source of risk-off dollar strength via demand for immediate dollar liquidity."

☆ Bank of Japan debated risk of inflation overshoot in March
▼ + stars: | 2023-05-08 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

A few of the nine-member board also said they saw some "positive signs" emerging in Japan that suggest the economy was making progress towards achieving the BOJ's 2% target, the minutes of the March 9-10 meeting showed. The board debated how companies were continuing to hike prices to pass on rising raw material costs, and price increases broadening to services, the minutes showed. While some saw positive signs emerging on the price front, many members said there was "extremely high" uncertainty over Japan's economic outlook that warranted keeping monetary policy ultra-loose, the minutes showed. Another member said any debate of a policy shift must be made cautiously as a reversal of ultra-loose policy would have wide-ranging effects on the public, the minutes showed. The March meeting was the final one chaired by Haruhiko Kuroda, who retired as governor in April and was succeeded by Kazuo Ueda.

☆ IMF sees uncertainty over Japan's monetary policy, spillover globally
▼ + stars: | 2023-05-04 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

While most Asian central banks must keep tightening monetary policy, Japan remains an exception with inflation still moderate - though this could change. "There is uncertainty around the direction of monetary policy in Japan, amid a rise in inflation," Srinivasan said. "Changes in Japan's monetary policy that lead to further increases in government bond yields could have global spillovers through Japanese investors, who have large investment positions in debt instruments abroad," Srinivasan said. With inflation exceeding its 2% target, markets are rife with speculation the Bank of Japan (BOJ) could modify its bond yield control policy in coming months. The BOJ kept ultra-low interest rates on Friday but announced a plan to review its past monetary policy moves, laying the groundwork for new governor Kazuo Ueda to phase out his predecessor's massive stimulus programme.

☆ Yen sinks to 15-year low vs euro as dovish BOJ contrasts with ECB
▼ + stars: | 2023-05-02 | by ( Kevin Buckland | ) www.reuters.com time to read: +3 min

TOKYO (Reuters) - The yen continued its steep descent on Tuesday, reaching a 15-year low to the euro, as the implications of a steadfastly dovish Bank of Japan kept foreign exchange markets busy engaging in so called ‘carry-trades’. FILE PHOTO: Japanese Yen and U.S. dollar banknotes are seen in this illustration taken March 10, 2023. The euro was steady at 150.965 yen after earlier touching 151.03 for the first time since September 2008. The greenback was about flat at 137.375 yen, and earlier rose to 137.58 for the first time since March 8. At the RBA, traders are laying 87% odds for no change to policy, although about 11 bps of tightening is priced for the August meeting.

☆ Yen sinks to 15-year low vs euro, Aussie jumps as central banks diverge
▼ + stars: | 2023-05-02 | by ( Kevin Buckland | ) www.reuters.com time to read: +3 min

TOKYO (Reuters) - The yen continued its steep descent on Tuesday, reaching a 15-year low to the euro, as the implications of a steadfastly dovish Bank of Japan continued to reverberate days after the decision. FILE PHOTO: Japanese Yen and U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/IllustrationMeanwhile, the Aussie dollar leapt to a one-week high after the Reserve Bank of Australia (RBA) surprised with a rate hike and signalled more tightening may come. The central bank lifted the cash rate to 3.85% and said “some further” tightening may be required to ensure that inflation returns to target in a reasonable timeframe. The European Central Bank (ECB), meanwhile, is widely expected to raise rates for a seventh straight meeting the following day, with a 50 basis-point increase on the table.

SummarySummary Companies ASEAN+3 finance leaders meet in Incheon, South Korea, TuesdayJapan hopes to propose strengthening currency swap linesExpansion will offer better safeguards vs pandemic, disastersINCHEON, May 2 (Reuters) - Asian finance leaders will on Tuesday look for ways to tighten safeguards to address emergency funding needs during pandemics and natural disasters, as global recession fears and volatile financial markets cloud the economic outlook. Japan, which co-chairs this year's meeting with Indonesia, hopes to discuss strengthening currency swap lines, Finance Minister Shunichi Suzuki told reporters on Friday. Japan is keen to propose a facility that enhances the use of existing currency swap lines, and allows members to tap funds in emergencies, said three sources with direct knowledge of the matter. But the swap lines have never been used, not even during the COVID-19 pandemic, leading to calls within the group for the system to be more accessible. The ASEAN+3 finance leaders, including Suzuki and Bank of Japan (BOJ) Governor Kazuo Ueda, are meeting on the sidelines of the ADB's annual meeting in Incheon in South Korea this week.

☆ China’s Midea regains outbound deal appetite
▼ + stars: | 2023-05-02 | by ( ) www.reuters.com time to read: +2 min

HONG KONG, May 2 (Reuters Breakingviews) - Midea (000333.SZ), a $58 billion Chinese white goods champion, made waves in Europe in 2016 when it bought German robot maker Kuka for nearly $5 billion. Seven years later, the company is eyeing Sweden’s home appliance brand Electrolux (ELUXb.ST), a complementary asset currently worth around $7 billion including debt. A successful tilt could mark the beginning of a revival in outbound M&A by Chinese firms after offshore deals touched a historic low of $29 billion in 2022, per EY estimates. To close the Kuka acquisition, Midea offered a 36% price premium and generous guarantees including leaving management in place until 2023. Nevertheless, it seems likely that more cash-rich Chinese companies like Midea, seeking to hedge weak domestic demand with overseas customers, will gingerly test cross-border M&A markets this year.

TOKYO, May 2 (Reuters) - Banking sector problems in the United States and Europe were caused by liquidity and interest rates risks, but won't impact on Japan's economy and financial system for now, Economy Minister Shigeyuki Goto said on Tuesday. Financial institutions and authorities will need to respond firmly to liquidity risks," Goto said. "I don't see the U.S. financial sector facing big problems." "The BOJ as central bank should tackle monetary policy operations, but I don't see the current financial situation impacting Japan's economy and financial sector as a whole. "I expect the BOJ to guide monetary policy flexibly, meaning that the central bank should do so appropriately taking economy and financial markets into account."

☆ DBS' safe profit haven nears its peak
▼ + stars: | 2023-05-02 | by ( ) www.reuters.com time to read: +2 min

HONG KONG, May 2 (Reuters Breakingviews) - Top Singapore-based bank DBS (DBSM.SI) on Tuesday released first-quarter numbers that will make rivals envious. Expenses fell, meaning the bank used just 38% of its revenue to cover costs compared to 59% at JPMorgan (JPM.N). Net interest income already fell 1% last quarter from December. Meanwhile, as much as DBS still touts its status as a safe haven for those – especially rich Chinese people – who want to shield their money from trouble elsewhere, that advantage is also dimming. Absent other such calamities or Gupta being wrong about interest rates, this might be as good as it gets for DBS for now.

☆ Currencies in limbo awaiting packed week of central banks
▼ + stars: | 2023-05-01 | by ( Stella Qiu | ) www.reuters.com time to read: +2 min

SYDNEY, May 1 (Reuters) - Currencies were in limbo on Monday as holidays in most of Asia made for thin trading, while traders braced for a packed week of central bank meetings that would offer the latest guidance on future rate hikes across continents. Activity in the foreign exchange markets was subdued due to the Labour Day holidays in Singapore, Hong Kong and mainland China. The Japanese yen slid 0.2% to 136.67 per dollar on Monday, extending its post-BOJ slump. The currency fell 1.1% last week to a seven-week low of $0.6573, but has found strong support at the March trough of $0.6564. The New Zealand dollar lost 0.3% to $0.6172, giving back some of the impressive rally last week.

☆ Tech groupthink could hinder AI competition
▼ + stars: | 2023-05-01 | by ( ) www.reuters.com time to read: +2 min

NEW YORK, May 1 (Reuters Breakingviews) - Everyone wants a piece of OpenAI, the startup behind artificial intelligence-powered chatbot ChatGPT. Now that OpenAI has the support of venture capital’s biggest names, that norm will make life harder for smaller challengers - especially given the steep costs of training AI models and how stretched venture funding is now. Rivals could look to the other tech goliaths; competitor Anthropic, backed by Microsoft nemesis Google, recently completed a similarly sized fundraise. By planting its flag in Silicon Valley early, OpenAI may have won a lasting edge in the AI race. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

SummarySummary Companies ASEAN+3 finance leaders meet in Incheon, South Korea, TuesdayJapan hopes to propose strengthening currency swap linesExpansion will offer better safeguards vs pandemic, disastersINCHEON, May 2 (Reuters) - Asian finance leaders on Tuesday will debate ways to beef up regional safeguards to better address emergency funding needs during pandemics and natural disasters, as global recession fears and volatile financial markets cloud the economic outlook. Japan, which co-chairs this year's meeting of ASEAN+3 nations with Indonesia, hopes to discuss strengthening currency swap lines, Finance Minister Shunichi Suzuki told reporters on Friday. Japan is keen to propose a facility that enhances usage of existing currency swap lines, and allows members to tap funds in times of emergencies such as pandemics and natural disasters, said three sources with direct knowledge of the matter. But the swap lines have never been used, including during the COVID-19 pandemic, giving rise to calls from within the group to make the system more easily accessible in the event of shock events. The ASEAN+3 finance leaders, including Suzuki and Bank of Japan (BOJ) Governor Kazuo Ueda, are meeting on the sidelines of the ADB's annual meeting in Incheon in South Korea this week.

Importantly, smaller firms are also starting to raise pay even as many of them face a margin crunch. Big firms offered pay hikes of 3.8% this year in annual wage talks with unions that ended in March, the largest increase in three decades. Attention has now shifted to whether small firms, which employ seven out of 10 workers in Japan, would follow suit. The BOJ's tankan business sentiment survey showed last month that small firms' current profits fell 2.7% in the last fiscal year to March, while big firms' earnings rose 11.5%. Less than half of small firms said they were able to pass on rising costs to customers as of last September, government data showed.

☆ Wall St ends higher, posts weekly, monthly gains on solid earnings, Fed pause hopes
▼ + stars: | 2023-04-28 | by ( Stephen Culp | ) www.reuters.com time to read: +4 min

All three major U.S. stock indexes advanced, but a drop in Amazon.com (AMZN.O) shares capped the Nasdaq's gains. The pan-European STOXX 600 index (.STOXX) rose 0.56% and MSCI's gauge of stocks across the globe (.MIWD00000PUS) gained 0.66%. REUTERS/Lucas Jackson/File Photo 1 2 3Emerging market stocks rose 0.50%. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) closed 0.52% higher, while Japan's Nikkei (.N225) rose 1.40%. The dollar index rose 0.13%, with the euro down 0.08% toat $1.1018.

☆ Wall Street gyrates, Treasury yields fall amid mixed data, earnings
▼ + stars: | 2023-04-28 | by ( Stephen Culp | ) www.reuters.com time to read: +4 min

The pan-European STOXX 600 index (.STOXX) rose 0.32% and MSCI's gauge of stocks across the globe (.MIWD00000PUS) gained 0.17%. Emerging market stocks rose 0.41%. The dollar index rose 0.07%, with the euro up 0.07% at $1.1035. Oil prices rose but remained on track for a monthly decline amid signs of an economic slowdown. Gold prices were essentially flat after economic data cemented the likelihood of another rate hike from the Fed.

☆ US dollar gains as inflation data backs Fed rate hike; yen sinks
▼ + stars: | 2023-04-28 | by ( Gertrude Chavez-Dreyfuss | ) www.reuters.com time to read: +3 min

The dollar index, a measure of the greenback's value against six major currencies, rose 0.1% to 101.54 . Friday's data showed the personal consumption expenditures (PCE) price index edged 0.1% higher in March after rising 0.3% in February. In the 12 months through March, the PCE price index increased 4.2% after climbing 5.1% in February. The so-called core PCE price index gained 4.6% on a year-on-year basis in March after rising 4.7% in February. Following the inflation data, the rate futures market has priced in a 90% chance of a 25 basis-point hike next week.

☆ Moribund euro zone, Amazon outlook dent stocks ahead of rate meetings
▼ + stars: | 2023-04-28 | by ( Huw Jones | ) www.reuters.com time to read: +4 min

Oil was firmer but still heading for another monthly decline after disappointing U.S. economic data and uncertainty over interest rates. The yen fell to a nine-year low against the euro after the Bank of Japan left its ultra-easy monetary policy unchanged. The euro zone grew only marginally in the first three months of 2023, and at a rate lower than market expectations, sending the euro lower. "Futures are saying interest rates will be lower than Fed Funds by year end, indicating a decline. Markets are pricing in an 85% chance of the Fed raising rates by 25 basis points, the CME FedWatch tool showed.

☆ Cool investors buy time for First Republic fix
▼ + stars: | 2023-04-28 | by ( ) www.reuters.com time to read: +1 min

NEW YORK, April 28 (Reuters Breakingviews) - If investors are worried that stresses at First Republic Bank (FRC.N) will hurt other lenders, they aren’t showing it. Stocks of regional U.S. banks are generally faring well despite fears that the San Francisco-based lender might fail. As the government and the private sector mull a rescue, the market’s composure buys precious time for reaching a deal. The difference between now and March, when Silicon Valley Bank and Signature Bank crumpled, is marked. Regional Bank exchange-traded fund (IAT.P) closed with a 0.7% gain.

☆ Exxon burns brighter on Permian and Guyana
▼ + stars: | 2023-04-28 | by ( ) www.reuters.com time to read: +2 min

NEW YORK, April 28 (Reuters Breakingviews) - Exxon Mobil (XOM.N) burned brighter in the first quarter, thanks to the Permian Basin and Guyana. The $485 billion oil giant earned $11.4 billion, or twice as much as it did the same period a year ago. The first gusher came from Texas, where Exxon pumped 615,000 barrels a day from the shale basin. Last quarter, Exxon took 375,000 barrels a day from offshore, and it has a target capacity of 1.2 million barrels by 2027, 20% more than the Permian. Shale wells quickly deplete, so the company may need to eventually top up in the Permian.

☆ European drug discounts will ruffle U.S. funder
▼ + stars: | 2023-04-28 | by ( ) www.reuters.com time to read: +2 min

LODNON, April 28 (Reuters Breakingviews) - Europe’s plan to slash prices on pharmaceutical drugs could set off tensions with the U.S. The European Union proposed on Wednesday a legislative overhaul of the sector across the 27-nation bloc. This would incentivise drug makers like AstraZeneca (AZN.L) and GSK (GSK.L) to sell to all European countries at once. And although the U.S. is trying to tackle soaring prices with the Inflation Reduction Act, Europe’s falling drug costs will widen the gap once again. This creates a problem for the U.S. government, which funds more drug development than any other country.

☆ BOJ’s new governor has relaxed debut
▼ + stars: | 2023-04-28 | by ( ) www.reuters.com time to read: +2 min

What once looked solely like temporary “cost-push” hikes engendered by volatile energy and food prices are starting to look more entrenched. Instead Ueda kept YCC in place and tweaked the forward guidance to remove reference to pandemic-related risks. The BOJ predicts inflation will fall back below 2% soon and plans a policy review over the next year or so. That suggests the BOJ is more worried about weak growth – it expects 1.4% this fiscal year - than inflation. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

A flood of inflation data releases were also mixed. The International Monetary Fund called on the ECB on Friday to keep raising interest rates until the middle of 2024 to help bring down high inflation. Versus the yen , the euro briefly rose to its highest level since December 2014 at 149.50. It was last up 1.2% at 149.35 yen after the BOJ left its ultra-easy monetary policy unchanged even as it scrapped a pledge to keep interest rates low. However, the central bank removed a pledge to keep interest rates at "current or lower levels" and said it would "conduct a broad-perspective review of monetary policy".

☆ Morning Bid: Amazon cools, Intel warms, Japan hesitates
▼ + stars: | 2023-04-28 | by ( ) www.reuters.com time to read: +5 min

[1/2] A smartphone with a displayed Intel logo is placed on a computer motherboard in this illustration taken March 6, 2023. But the dramatic re-acceleration of Big Tech stocks this week - where the NYFANG+TM (.NYFANG) index of the top 10 Big Tech stocks is now up 37% so far this year - is competing with multiple macro narratives that are increasingly hard to read. With the Fed meeting in view, the release of March PCE price inflation data later on Friday tops the diary. Wall St stock futures fell back 0.4% after a wild ride in Amazon.com shares overnight. With much of Europe and Asia closed on Monday for the May Day bank holiday, Asia bourses advanced in Wall St's slipstream but Europe retreated sharply on some jarring corporate updates.

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