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In fixed income U.S. Treasury prices fell following the BOJ's shock move, with the benchmark 10-year Treasury yield was rising to a three-week high of 3.69%. Among the S&P 500's 11 major sectors, energy index (.SPNY) was leading gains, up 1.8%, as crude oil prices rose. The materials (.SPLRCM) and financials (.SPSY) sectors were the next biggest gainers with banks benefiting from a rise in Treasury yields. Advancing issues outnumbered declining ones on the NYSE by a 1.45-to-1 ratio; on Nasdaq, a 1.38-to-1 ratio favored advancers. The S&P 500 posted 1 new 52-week highs and 14 new lows; the Nasdaq Composite recorded 44 new highs and 331 new lows.

☆ Wall St reverses sell-off, dollar slides, Treasury yields rise on BOJ policy shift
▼ + stars: | 2022-12-20 | by ( Stephen Culp | ) www.reuters.com time to read: +3 min

Wall Street's "upward move is on relatively light volume," said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. Emerging market stocks lost 0.55%. REUTERS/Issei Kato 1 2 3U.S. Treasury yields jumped after the Bank of Japan broadened its yield curve control, which prompted a global bond sell-off. Japan's surprise policy review sent the yen to a four-month peak against the greenback, and the dollar fell sharply against a basket of currencies. Gold breached the $1,800 level as the dollar lost altitude.

☆ Bank of Japan Blinked in Standoff With Markets
▼ + stars: | 2022-12-20 | by ( James Mackintosh | ) www.wsj.com time to read: 1 min

Investors are often told not to fight the Fed. Japan has just shown the opposite: Markets fought the central bank, and markets won. On Tuesday the Bank of Japan lifted its cap on 10-year government bond yields from 0.25% to 0.5%, with global effects. Yields that had been suppressed by the BOJ jumped, lifting yields on Treasurys and bonds in other developed markets. The yen soared more than 3%, briefly having its biggest gain since 2009 before pulling back a bit, while Japanese stocks dropped.

Major U.S. equity averages marked their fourth straight session of losses on Monday as investors shied away from riskier bets, worried that the Federal Reserve's interest rate hikes could push the U.S. economy into recession. Financial stocks (.SPSY) climbed 0.9%, with banks benefiting from a rise in Treasury yields. The Fed struck a hawkish tone last week at its policy meeting by saying that it expects interest rates to remain higher for longer, sparking a selloff across stock markets. Treasuries fell following the BOJ's shock move, with the benchmark 10-year Treasury yield rising to a three-week high of 3.68%. The S&P index recorded one new 52-week high and 12 new lows, while the Nasdaq recorded 31 new highs and 228 new lows.

☆ The Bank of Japan Steals Christmas
▼ + stars: | 2022-12-20 | by ( Jacky Wong | ) www.wsj.com time to read: 1 min

Haruhiko Kuroda said the move is aimed at improving the functioning of the government bond market. The Bank of Japan —the last central bank holdout on ultralow interest rates—has sent global markets a nasty early Christmas surprise. The Japanese central bank surprised nearly everyone in the market on Tuesday by raising its effective cap on 10-year government bond yields to 0.5% from 0.25%. Under its yield curve control policy, the BOJ has long intervened to keep bond yields within a specified target range near zero. This latest tweak effectively raised the interest rate for this tenor: 10-year yields shot up to 0.41% from around 0.25%.

Wall Street's main indexes continued their losing streak for a fourth straight session on Monday as investors shied away from riskier bets, worried that the Federal Reserve's interest rate hikes could push the U.S. economy into recession. The Fed has managed to slow the economy down so it's likely that earnings estimates (for Q4) are going to come down. Treasuries fell following the BOJ's shock move, with the benchmark 10-year Treasury yield rising to a three-week high of 3.66%. Earlier, data showed U.S. single-family homebuilding tumbled in November as higher mortgage rates continued to depress housing market activity. A slew of other economic data due this week including consumer confidence and core inflation will provide more clues to investors on future interest rate hikes.

☆ Falling stocks and bruised dollar reel from BOJ's surprise policy shift
▼ + stars: | 2022-12-20 | by ( Nell Mackenzie | ) www.reuters.com time to read: +3 min

LONDON, Dec 20 (Reuters) - World stocks slid on Tuesday after a policy tweak by Japan's central bank rattled investors already worried about the economic fallout of rising interest rates and untameable inflation. The policy decision caused an immediate spike in the yen, with the dollar index dropping 0.80% to 103.95, a six-month low. Japanese 10-year government bond yields surged to their highest level since 2014, with euro zone yields following suit. This knocked other currencies from recent gains, with both the euro and pound falling more than 3.5% against the yen. In the oil market, Brent crude rose 0.20% to $79.95 per barrel, while U.S. crude rose 1.3% to $76.19.

☆ Futures subdued after BOJ's policy surprise
▼ + stars: | 2022-12-20 | by ( ) www.reuters.com time to read: +2 min

SummarySummary Companies Futures: Dow climbs 0.12%, S&P up 0.01%, Nasdaq off 0.13%Dec 20 (Reuters) - U.S. stock index futures came under pressure on Tuesday after the Bank of Japan surprised global investors with a policy shift that would allow long-term interest rates to rise more. The BOJ decided to allow the 10-year bond yield to move 50 basis points either side of its 0% target, bigger than the previous 25 basis point band, against expectations of no change at its policy meeting. Treasuries fell following BoJ's shock move, with benchmark 10-year Treasury yield rising more than 8 basis points to a three-week high of 3.6676%. A slew of other economic data due this week including consumer confidence, existing home sales and core inflation will provide more clues to investors on future interest rate hikes. ET, Dow e-minis were up 41 points, or 0.12%, S&P 500 e-minis were up 0.25 points, or 0.01%, and Nasdaq 100 e-minis were down 14.25 points, or 0.13%.

☆ Sterling inches higher, heads for biggest quarterly gain since 2009
▼ + stars: | 2022-12-20 | by ( Harry Robertson | ) www.reuters.com time to read: +2 min

Currency traders were focused on the Japanese yen, which jumped after the Bank of Japan (BoJ) unexpectedly tweaked a key policy. Sterling was last up 0.1% against the dollar at $1.216, having fluctuated in and out of positive territory in morning trading in London. The euro was 0.15% higher against sterling at 87.49 pence, meanwhile, after falling earlier in the session. The BoJ surprised global investors by tweaking its bond yield control policy on Tuesday. It will now allow the 10-year bond yield to move 50 basis points either side of its 0% target, from 25 basis points previously.

☆ Stocks, bonds fall as BOJ's surprise policy shift spooks investors
▼ + stars: | 2022-12-20 | by ( Nell Mackenzie | ) www.reuters.com time to read: +3 min

The Bank of Japan (BOJ) widened the allowable band for long-term yields to 50 basis points either side of its 0% target, from 25 basis points previously. European stock markets hit six-week lows, with the German (.GDAXI) and French benchmark indices (.FCHI) falling by as much as 1%, while London's FTSE 100 (.FTSE) lost as much as 0.8%. Japanese 10-year government bond yields surged to their highest since 2014, with euro zone yields following suit. The policy decision caused an immediate spike in the yen with the dollar index dropping 0.80% to 103.95, a six-month low. Credit Suisse on Monday upgraded its outlook from neutral to outperform for China's stock markets in the year ahead.

☆ Japan jolts markets in surprise change to yield curve policy
▼ + stars: | 2022-12-20 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

In a move explained as seeking to breath life back into a dormant bond market, the BOJ decided to allow the 10-year bond yield to move 50 basis points either side of its 0% target, wider than the previous 25 basis point band. But the central bank kept its yield target unchanged and said it will sharply increase bond buying, a sign the move was a fine-tuning of existing ultra-loose monetary policy rather than a withdrawal of stimulus. "Today's step is aimed at improving market functions, thereby helping enhance the effect of our monetary easing. "This change will enhance the sustainability of our monetary policy framework. It's absolutely not a review that will lead to an abandonment of YCC or an exit from easy policy."

☆ BOJ Governor Kuroda's comments at news conference
▼ + stars: | 2022-12-20 | by ( Reuters Staff | ) www.reuters.com time to read: +4 min

FILE PHOTO: Bank of Japan Governor Haruhiko Kuroda attends a news conference in Tokyo, Japan, January 21, 2020. Following are excerpts from BOJ Governor Haruhiko Kuroda’s comments at his post-meeting news conference, which was conducted in Japanese, as translated by Reuters:REASON BEHIND THE BOJ’S DECISION“Overseas market volatility has heightened from around spring ... While we have kept the 10-year bond yield from exceeding the 0.25% cap, this has caused some distortions in the shape of the yield curve. It’s premature to debate specifics on changing the monetary policy framework or an exit from easy policy. “This change will enhance the sustainability of our monetary policy framework.

☆ BOJ jolts markets in surprise change to yield curve policy
▼ + stars: | 2022-12-20 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

Shares tanked, while the yen and bond yields spiked following the decision, which caught offguard investors who had expected the BOJ to make no changes to its yield curve control (YCC) until Governor Haruhiko Kuroda steps down in April. But the central bank kept its yield target unchanged and said it will sharply increase bond buying, a sign the move was a fine-tuning of existing ultra-loose monetary policy rather than a withdrawal of stimulus. Reuters GraphicsAs widely expected, the BOJ kept unchanged its YCC targets, set at -0.1% for short-term interest rates and around zero for the 10-year bond yield, at a two-day policy meeting that ended on Tuesday. The 10-year Japanese government bond (JGB) yield briefly spiked to 0.460%, close to the BOJ's newly set implicit cap. Kuroda has repeatedly said he saw no need for the BOJ to tweak YCC, including taking immediate steps to address the side-effects such as the distortion it was creating in the bond market.

☆ Bank of Japan makes surprise policy tweak
▼ + stars: | 2022-12-20 | by ( ) www.reuters.com time to read: +8 min

ATUSHI TAKEDA, CHIEF ECONOMIST, ITOCHU ECONOMIC RESEARCH, TOKYO:"Today's move reflects the BOJ's determination not to alter its yield cure control policy. CAROL KONG, CURRENCY STRATEGIST, COMMONWEALTH BANK OF AUSTRALIA, SYDNEY:"I think the move was certainly unexpected, to say the least. MOH SIONG SIM, CURRENCY STRATEGIST, BANK OF SINGAPORE:"They've widened the band, and I guess that came earlier than expected. CHRISTOPHER WONG, CURRENCY STRATEGIST, OCBC, SINGAPORE:"The timing of the policy tweak is a surprise, though we have been expecting the move to come in 2Q 2023. "The tweak may seem modest but is significant for a central bank that has held dovish for a long time.

☆ Yen soars to 4-month peak after surprise BOJ policy tweak
▼ + stars: | 2022-12-20 | by ( Kevin Buckland | ) www.reuters.com time to read: +3 min

The dollar tumbled as much as 2.78% to 133.11 yen , a level last seen on Aug. 16, before last trading 2.62% weaker at 133.345. It had been slightly stronger at about 137.40 yen ahead of the policy announcement. Eyes will now be trained on BOJ Governor Haruhiko Kuroda's media briefing later in the day for additional hints about a pivot away from ultra-easy policy. Most BOJ watchers had expected no changes until his 10-year term finishes at the end of March. "Unease over China's haphazard COVID policy changes also seems to be keeping a lid on AUD/USD," Callow added.

Japan's Nikkei Stock Index (.N225) shed 2.2% after trading in positive territory earlier in the day, as stocks resumed trading following the BOJ decision. The dollar dropped 2.43% against the yen to 133.62 after the BOJ decision, hitting a four-month low. In early European futures trading, the pan-region Euro Stoxx 50 futures were down 0.89% at 3,784, German DAX futures were down 0.91% at 13,888, FTSE futures were down 0.63% at 7,321. U.S. stock futures, the S&P 500 e-minis , were down 0.52% at 3,825.5. In Asian trading, the yield on benchmark 10-year Treasury notes rose to 3.6752% compared with its U.S. close of 3.583% on Monday.

☆ Bank of Japan reviews yield-curve control policy
▼ + stars: | 2022-12-20 | by ( ) www.reuters.com time to read: +4 min

Dec 20 (Reuters) - The Bank of Japan has slightly loosened the shackles on its 10-year yield target and said it will review its yield-curve control policy, surprising financial markets and sending the yen sharply higher. However, it is only a first step and yield-curve control (YCC) remains in place, as does negative rate strategy. CAROL KONG, CURRENCY STRATEGIST, COMMONWEALTH BANK OF AUSTRALIA, SYDNEY:"I think the move was certainly unexpected, to say the least. MOH SIONG SIM, CURRENCY STRATEGIST, BANK OF SINGAPORE:"They've widened the band, and I guess that came earlier than expected. CHRISTOPHER WONG, CURRENCY STRATEGIST, OCBC, SINGAPORE:"The timing of the policy tweak is a surprise, though we have been expecting the move to come in 2Q 2023.

☆ BOJ allows yields to rise more in surprise tweak to policy
▼ + stars: | 2022-12-20 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

[1/2] A Japanese flag flutters atop the Bank of Japan building under construction in Tokyo, Japan, September 21, 2017. "The BOJ decided to modify the conduct of yield curve control to improve market functioning and encourage a smoother formation of the entire yield curve, it said in a statement. As widely expected, the BOJ kept unchanged its yield curve control (YCC) targets, set at -0.1% for short-term interest rates and around zero for the 10-year bond yield, at a two-day policy meeting that ended on Tuesday. But it decided to allow the 10-year bond yield to move up and down 50 basis points around the 0% target, wider than the previous 25 point band. Kuroda has repeatedly said he saw no need for the BOJ to tweak yield curve control, including taking immediate steps to address the side-effects such as the distortion it was creating in the bond market.

☆ Yen jumps 2.8% to 4-month peak after hawkish BOJ policy tweak
▼ + stars: | 2022-12-20 | by ( Kevin Buckland | ) www.reuters.com time to read: +1 min

[1/2] Banknotes of Japanese yen are seen in this illustration picture taken September 22, 2022. The dollar tumbled as much as 2.78% to 133.11 yen , a level last seen on Aug. 16. The dollar had been slightly stronger versus the yen ahead of the policy announcement. Eyes will now be trained on BOJ Governor Haruhiko Kuroda's media briefing later in the day for additional hints about a pivot away from ultra-easy policy. Most BOJ watchers had expected no change in policy until his 10-year term ends at the end of March.

☆ Yen on defensive before BOJ; NZ dollar sinks
▼ + stars: | 2022-12-20 | by ( Kevin Buckland | ) www.reuters.com time to read: +3 min

[1/2] Banknotes of Japanese yen are seen in this illustration picture taken September 22, 2022. New Zealand's dollar dropped after a big decline in a survey of local business confidence. The Aussie, though, was little changed after shrugging off minutes from the Reserve Bank of Australia's last policy meeting. Ten-year Treasury yields held at a one-week high of 3.601% in Tokyo trading. Those minutes reinforced the "uncertain outlook" for policy, providing an additional weight on the Australian dollar, said Sean Callow, a strategist at Westpac.

☆ FTSE 100 tracks global risk-off mood; Petrofac plummets
▼ + stars: | 2022-12-20 | by ( Johann M Cherian | ) www.reuters.com time to read: +2 min

SummarySummary Companies FTSE 100 down 0.2%, FTSE 250 down 0.6%Petrofac plummets to all time lowSage group slumps to bottom of FTSE 100Dec 20 (Reuters) - UK's export-oriented FTSE 100 index fell on Tuesday as investors turned risk-averse after the Bank of Japan unexpectedly tweaked its monetary policy, while oil services provider Petrofac dropped to an all-time low. The blue-chip FTSE 100 (.FTSE) fell 0.2%, while the mid-cap FTSE 250 was off 0.6%. The Europe-wide STOXX 600 index (.STOXX) was down 0.5%. Weighing on global equities, the Bank of Japan widened long-term yield controls that allow long-term interest rates to rise more. Reporting by Johann M Cherian in Bengaluru; Editing by Maju SamuelOur Standards: The Thomson Reuters Trust Principles.

☆ European shares drop as BOJ's policy shift dents risk appetite
▼ + stars: | 2022-12-20 | by ( Amruta Khandekar | ) www.reuters.com time to read: +3 min

The region-wide STOXX 600 index (.STOXX) was down 0.5% by 0914 GMT, but came off a one-month low hit earlier in the session. The policy tweak was widely seen as the beginning of a potential end to Japan's ultra-loose monetary policy and comes just as hawkish messages from other major central banks last week doused hopes of an end to monetary policy tightening any time soon. Rate-sensitive real estate (.SX86P) stocks led the losses in the STOXX 600, falling 2.5% to hit their lowest in more than six weeks. The real estate sector was also dragged lower by shares of Aroundtown SA (AT1.DE) and Derwent London (DLN.L), which fell 11.4% and 3.5% respectively, after Berenberg cut their price targets. Among individual stocks, shares of Orange (ORAN.PA) slipped after the French telecoms group said its deputy chief executive and head of finance is leaving the company.

☆ European stock index futures drop after surprise BOJ policy shift
▼ + stars: | 2022-12-20 | by ( ) www.reuters.com time to read: +1 min

Dec 20 (Reuters) - European stock index futures fell on Tuesday after Bank of Japan rattled markets with a surprise policy shift that would allow long-term interest rates to rise more. Futures on the EURO STOXX 50 index and Germany's DAX briefly fell more than 1% each, before steadying at 0.9% declines by 0710 GMT. The policy tweak was widely seen as the beginning of a potential end to Japan's ultra-loose monetary policy and comes just as hawkish messages from other major central banks last week doused hopes of an end to monetary policy tightening any time soon. London's FTSE 100 index futures dipped 0.5%. Reporting by Amruta Khandekar; Editing by Saumyadeb ChakrabartyOur Standards: The Thomson Reuters Trust Principles.

☆ Gold firms as dollar slips; Fed's rate-hike bets cap advance
▼ + stars: | 2022-12-20 | by ( Ashitha Shivaprasad | ) www.reuters.com time to read: +2 min

A weaker dollar makes gold more attractive to overseas buyers. However, "the prospects of a higher terminal Fed rate could prevent gold enjoying a runaway rally next year". Last week, Fed Chair Jerome Powell said the U.S. central bank will deliver more rate hikes next year to curb inflation. Although gold is considered an inflation hedge, higher rates increase the opportunity cost of holding the asset. European Central Bank Vice-President Luis de Guindos signalled the bank was determined to keep raising interest rates.

☆ Bank of Japan shocks global markets with bond yield shift
▼ + stars: | 2022-12-20 | by ( Elliot Smith | ) www.cnbc.com time to read: +2 min

The Bank of Japan on Tuesday shocked global markets by widening the target range for its 10-year government bond yield. Global markets were jolted overnight after the Bank of Japan unexpectedly widened its cap on 10-year Japanese government bond yields , sparking a sell-off in bonds and stocks around the world. The central bank introduced its yield curve control mechanism in September 2016, with the intention of lifting inflation towards its 2% target after a prolonged period of economic stagnation and ultra-low inflation. The YCC change prompted the Japanese yen and bond yields around the world to rise, while stocks in Asia-Pacific tanked. European government bonds also sold off, with Germany's 10-year bund yield adding almost 9 basis points to 2.2840%.

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