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☆ BOJ debated side effects of easy policy at March meeting
▼ + stars: | 2023-03-20 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

At the March meeting, the BOJ maintained its ultra-loose policy, including a controversial 0.5% cap for the 10-year bond yield that had come under attack from markets betting on a near-term interest rate hike. But some members voiced concern over lingering distortions in the yield curve, which the BOJ sought to contain in December by raising the 10-year bond yield cap to 0.5% from 0.25%. At the time of the March meeting, the BOJ had been forced to ramp up bond buying to defend its 0.5% cap for the 10-year bond yield. The tussle with market participants betting on a near-term rate hike kept the 10-year yield pinned at the 0.5% ceiling, instead of fluctuating more freely as the BOJ had hoped. The 10-year bond yield was 0.250% on Monday, well off the BOJ's 0.5% cap, as investors loaded up on JGBs that are considered safe-haven assets favoured in times of market stress.

☆ Kuroda defends Bank of Japan's ultra-dovish stance in his final policy meeting
▼ + stars: | 2023-03-10 | by ( Jihye Lee | ) www.cnbc.com time to read: +3 min

Haruhiko Kuroda, governor of the Bank of Japan (BOJ), at the central bank's headquarters in Tokyo, Japan, on Thursday, May 27, 2021. Bloomberg | Bloomberg | Getty ImagesJapan's outgoing central governor Haruhiko Kuroda defended the Bank of Japan's ultra-dovish monetary policy stance at his final policy meeting on Friday. Kuroda has led the central bank's ultra-dovish monetary policy for the past decade – even as global central banks in recent months raised interest rates in a bid to tame inflation. "Financial conditions have been accommodative on the whole, although weakness in firms' financial positions has remained in some segments," the central bank said. New BOJ leadershipJapan's upper house in parliament approved Ueda to be the next central bank governor, Kyodo reported.

☆ Japan government bond breaches yield cap, BOJ steps in with buying, loans
▼ + stars: | 2023-02-22 | by ( Junko Fujita | ) www.reuters.com time to read: +2 min

TOKYO, Feb 22 (Reuters) - Japan's 10-year government bond yield on Wednesday breached the top end of the Bank of Japan's policy band for a second straight session, prompting the central bank to step into the market with emergency bond buying and offering of loans. read moreThe yield on 10-year JGBs climbed to 0.505% on Wednesday, breaking through the central bank's 0.5% cap and marking its highest level since Jan. 18. The BOJ bought 300 billion yen ($2.2 billion) of Japanese government bonds with maturities of five to 10 years and 100 billion yen of bonds with maturities of 10 to 25 years. In its struggle to contain elevated yields, the BOJ bought a record 23.69 trillion yen ($175.69 billion) worth of government bonds in January. This would be the fourth time that BOJ provides such loans since last month after amending rules for its funds-supply operation.

☆ Asia equities fall on fear of hawkish central bank hikes
▼ + stars: | 2023-02-22 | by ( Selena Li | ) www.reuters.com time to read: +2 min

"It concerns the market that central banks will have to hike rates a lot more to curb inflation," said Kerry Craig, JPMorgan Asset Management's global market strategist. New Zealand's central bank raised interest rates by 50 basis points to a more than 14-year high of 4.75% on Wednesday. read moreThe central bank said it expected to keep tightening further to ensure inflation returned to its target range over the medium term. Japan's Nikkei share index (.N225) fell 1.25% on Wednesday following a Tuesday PMI report showing the factory sector had contracted. The dollar index fell 0.077%, but analyst expect interest rate rises to lift the dollar, hurting emerging market equities, which benefited from a falling dollar.

☆ BlackRock downgrades Japan stocks on possible monetary policy shift
▼ + stars: | 2023-02-15 | by ( Jihye Lee | ) www.cnbc.com time to read: +3 min

Kazuhiro Nogi | Afp | Getty ImagesBlackRock, the world's largest asset manager, cut Japanese stocks to "underweight" – as Japan is set to appoint a new governor to lead its central bank. "We downgrade Japanese stocks on policy uncertainty and a worsening economic environment," BlackRock's research arm said Monday, before the government submitted its central bank picks to parliament. U.S. Treasury yields spiked, with the 10-year note and the 30-year note jumping 7 and 8 basis points respectively. One possibility is the Bank of Japan further widening its tolerance range beyond 50 basis points. Nikkei separately reported earlier this month that the central bank purchased 23.7 trillion yen ($182 billion) of JGBs in January, a new record high.

If this continues, liquidity from Japan will continue to support global markets," he adds. The BOJ flow in January outstripped the combined liquidity drain from the Fed, European Central Bank and Bank of England, resulting in a G4 net liquidity provision of $115.3 billion. Operations from the ECB and, most notably, the PBOC, have helped pour around $1 trillion of liquidity into the global financial system in recent months. As Citi's King says, when changes in even the least significant line items on central bank balance sheets are measured in the hundreds of billions of dollars, "they should command investors' respect." Related columns:- U.S. debt ceiling saga softens Fed's QT- Bank of Japan shock raises 2023 global liquidity risksBy Jamie McGeever; Editing by Paul SimaoOur Standards: The Thomson Reuters Trust Principles.

With inflation accelerating, Ueda could finally set Japan on a path to raise rates after the BOJ spent a decade fighting deflation risks with its unorthodox bond buying scheme costing trillions of yen. Ueda himself on Friday said current policy settings were appropriate, which also put a bit of a dampener on expectations of any shift. Implied volatility has also eased in the forex options market, suggesting an ebbing in bets on big shifts in the yen exchange rate. "It's not very apparent that (Ueda) would take on the job and then immediately change the policy." To be sure, 10-year Japanese yields were untraded at the BOJ's ceiling on Monday, indicating plenty of investors are staying short.

The BOJ’s YCC faces a reckoningThe surprise news left investors and analysts trying to parse Ueda's recent commentary. "There is probably a lack of clarity on Ueda's policy leanings at the moment, but at least it is clear that Amamiya (who is seen as a dove) is out. That removes one of the headwinds for the yen," said Christopher Wong, currency strategist at OCBC in Singapore. "The knee-jerk reaction in yen appreciation is more of a reaction to Amamiya being out of the race." I think the new team means that they will redesign the BOJ's monetary policy, not maintain the current policy," said Takayuki Miyajima, a senior economist at Sony Financial Group in Tokyo.

☆ Bank of Japan showed no sign of making a hawkish shift in its January meeting
▼ + stars: | 2023-01-26 | by ( Jihye Lee | ) www.cnbc.com time to read: +3 min

Nationwide core inflation in Japan reached 4% in December, the highest annualized print since December 1981, according to data released last week. Yuichi Yamazaki | Afp | Getty ImagesThe Bank of Japan emphasized that it wants to maintain its current monetary policy, including leaving its yield curve control unchanged, according to the Summary of Opinions from its last meeting published Thursday. The "yield curve control" refers to a policy of the Japanese central bank that's designed to keep the 10-year yield on Japanese Government Bonds (JGBs) within 0.5 percentage points of zero. The central bank continued its operations to purchase Japanese government bonds in response to upward pressure on yields. I think a lot will depend on, for instance, the inflation data in the coming months," he told CNBC's "Street Signs Asia."

☆ Morning Bid: It's all about the weather
▼ + stars: | 2023-01-24 | by ( ) www.reuters.com time to read: +2 min

A look at the day ahead in European and global markets from Wayne Cole. Essentially banks could borrow at an average 0.145% fixed for five years to invest in JGBs - what could go wrong? The U.S. manufacturing PMI is forecast to dip to 46.0 from 46.2, with services at 45.0 from 44.7. Ironically, the weather in the States in recent weeks has been a lot worse than in Europe, which was not how this story was supposed to pan out. ($1 = 130.2100 yen)Reporting by Wayne Cole; Editing by Jacqueline WongOur Standards: The Thomson Reuters Trust Principles.

☆ Japan warns of dire finances as BOJ struggles to contain yields
▼ + stars: | 2023-01-23 | by ( Tetsushi Kajimoto | ) www.reuters.com time to read: +3 min

It is not unusual for the finance minister to refer to Japan's strained finances. The Ministry of Finance estimates that every 1-percentage-point rise in interest rates would boost debt service by 3.7 trillion yen to 32.5 trillion yen for the 2025/2026 fiscal year. "Overall JGB issuance, including rolling over bonds, remain at an extremely high level worth about 206 trillion yen. We must secure fiscal space under normal circumstances to safeguard trust in Japan and people's livelihood at a time of emergency." LABOUR REFORMPrime Minister Fumio Kishida echoed Suzuki's resolve to revive the economy and tackle fiscal reform.

☆ Japan finmin warns of severe finances as BOJ struggles to contain yields
▼ + stars: | 2023-01-23 | by ( Tetsushi Kajimoto | ) www.reuters.com time to read: +3 min

The Ministry of Finance estimates that every 1-percentage-point rise in interest rates would boost debt service by 3.7 trillion yen ($29 billion) to 32.5 trillion yen ($251 billion) for the 2025/2026 fiscal year. "The government will strive to stably manage Japanese government bond (JGBs) issuance through close communication with the market," he said. "Overall JGB issuance, including rolling over bonds, remain at an extremely high level worth about 206 trillion yen ($1.6 trillion). We must secure fiscal space under normal circumstances to safeguard trust in Japan and people's livelihood at a time of emergency." lABOUR REFORMPrime Minister Fumio Kishida echoed Suzuki's resolve to revive the economy and tackle fiscal reform.

SINGAPORE, Jan 20 (Reuters) - Japan's central bank appears to have scored an interim win in its long-drawn battle with bond bears. The Bank of Japan's (BOJ) policy meeting this week was, at first glance, a damp squib for excited markets. It maintained its cap on 10-year yields, defying market expectations for change, and modified a funds-supply operation such that it offers more money for longer tenors to banks. After Wednesday's decision to retain ultra-low rates, 10-year bond yields, which had been testing the BOJ's 0.5% cap for a week, settled below 0.4%, suggesting many speculators were closing positions. "Most people are concerned about market liquidity in the bond market," a senior trader at a global bank in Asia told Reuters.

☆ Japanese yen tumbles, bonds rally after BOJ keeps policy ultra easy
▼ + stars: | 2023-01-18 | by ( Stella Qiu | ) www.reuters.com time to read: +5 min

The bank, however, maintained ultra-low interest rates, including its 0.5% cap for the 10-year bond yield. The dollar also gained 2.5% against the Japanese yen to 131.4 yen, in its biggest percentage daily rise since March 2020. In a Reuters poll, 97% of economists expected the BOJ to maintain its ultra-easy policy at the meeting. A survey of global fund managers by BofA Securities out on Tuesday showed that expectations of further appreciation in the Japanese yen in January were the highest in 16 years. The dollar index , which measures the safe-haven dollar against six peers, rose 0.4% at 102.84.

☆ Morning Bid: BOJ goes for broke
▼ + stars: | 2023-01-18 | by ( Wayne Cole | ) www.reuters.com time to read: +3 min

SYDNEY, Jan 18 (Reuters) - A look at the day ahead in European and global markets from Wayne Cole. Global bond markets breathed a sigh of relief and U.S. 10-year yields eased 8 basis points to 3.48%. The BOJ will continue to buy bonds in whatever amount necessary to maintain its target for 10-year JGB yields at zero. It was unclear how meaningful this change would be, but the BOJ's defiant stance did see 10-year JGB yields backtrack to 0.36% from an early high of 0.51%. Analysts still suspect the BOJ will again have to buy a record amount of JGBs this month to maintain the ceiling.

☆ Morning Bid: Japan hesitates
▼ + stars: | 2023-01-18 | by ( ) www.reuters.com time to read: +4 min

Judging by Wednesday's reaction, world markets reckon Japan will eventually abandon its ultra-loose monetary policy despite a stubborn doubling down this week - and overseas ructions may be less than feared. But after some wild gyrations on the initial announcement, the market reaction was rather muted on balance. Japan's Nikkei (.N225) ended 2.5% higher, but it closed before the yen rebound in European hours. The release of December U.S. producer price, retail sales and industrial production numbers later on Wednesday now takes centre stage. U.S. Treasury auctions 20-year bonds* Bank of Japan policy decision.

Japan's 10-year bond yield, trading at 0.4%, fell on Wednesday but is not far off its highest levels since 2015. Total holdings of foreign bonds by Japanese institutional investors, excluding Japan's $1 trillion reserve portfolio, reached $3 trillion at their peak. GOING HOMEThe implications of higher inflation and a possible end to ultra-low rates are not lost on Japanese investors. Still, anticipating a shift, Japanese investors sold a net 2.1 trillion yen ($15.94 billion) of foreign bonds in December, marking a fourth straight month of selling. According to Nomura, Japanese investors have been far more active buyers of global and overseas equities than domestic stocks in the last decade.

☆ Bank of Japan could announce major policy shift this week as bond yields top limit again
▼ + stars: | 2023-01-16 | by ( Jihye Lee | ) www.cnbc.com time to read: +4 min

This picture taken on October 27, 2022 shows pedestrians walking in front of the Bank of Japan (BoJ) headquarters in Tokyo. The move would come less than a month after the Bank of Japan caught markets off guard by widening its tolerance range for 10-year Japanese government bond yields. Indeed, Nikkei reported Monday that the Bank of Japan purchased JGBs worth more than 2 trillion yen ($15.6 billion) after the nation's 10-year bond yield curve topped 0.5% for two consecutive sessions. While the central bank leaving interest rates unchanged would be positive for Japanese stocks, BofA said a removal of its yield curve control policy could lead to sharp declines. HSBC, meanwhile, expects the central bank to announce further widening of the yield curve control tolerance band instead of abolishing the policy altogether.

☆ Stocks becalmed before potential CPI storm
▼ + stars: | 2023-01-12 | by ( Tom Westbrook | ) www.reuters.com time to read: +4 min

European futures rose 0.4%. Bonds held overnight gains and the U.S. dollar was pinned near a seven-month low at $1.0769 per euro . "(It) is the CPI number that could help settle the debate for the February meeting," said NatWest Markets' U.S. rates strategist Jan Nevruzi. U.S. Treasuries added a little to overnight gains, with benchmark 10-year yields down 3.7 bps to 3.5189% and 30-year yields down 4.4 bps to 3.6375%. Foreign exchange markets were elsewhere holding their breath ahead of CPI data while China's reopening kept a bid under Asia's currencies.

☆ Asia stocks hit 7-month high on China and CPI bets
▼ + stars: | 2023-01-12 | by ( Tom Westbrook | ) www.reuters.com time to read: +4 min

Following gains for Wall Street indexes overnight, MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.5% and touched an almost seven-month high. Bonds were bought around the world overnight and the U.S. dollar wavered, to touch a seven-month low at $1.0776 per euro . "(It) is the CPI number that could help settle the debate for the February meeting," said NatWest Markets' U.S. rates strategist Jan Nevruzi. "We expect a below consensus CPI print, which if it materialises, could push this rally even further." Foreign exchange markets were elsewhere holding their breath ahead of CPI data while China's reopening kept a bid under Asia's currencies.

☆ Japan considers green transition bonds issuance for next fiscal year
▼ + stars: | 2023-01-11 | by ( Tetsushi Kajimoto | ) www.reuters.com time to read: +2 min

Japan plans to issue 1.6 trillion yen of such bonds in the fiscal year that ends April 2024, with an eye on those with maturity of 10 years and 20 years. "It will be like hand-to-mouth operations if we rely too much on short term government bonds," Saito said. The average duration of government bond issuance estimated for next fiscal year is eight years and one month, six months shorter that the current fiscal year. "We will appropriately conduct debt management, which centres on ascertaining market needs and allocate issuance by duration." Saito also said interest rates remain low but the current situation will not last indefinitely, as seen in spikes in overseas bond market yields.

☆ BOJ's Kuroda aims to keep policy loose to meet price, wage growth goals
▼ + stars: | 2023-01-04 | by ( Yoshifumi Takemoto | ) www.reuters.com time to read: +1 min

TOKYO, Jan 4 (Reuters) - Bank of Japan Governor Haruhiko Kuroda said on Wednesday the central bank would maintain its loose monetary policy in order to sustain inflation at its 2% target along with wage growth. Kuroda's comments at a New Year gathering of the Japanese bankers' association counter lingering market speculation the BOJ may join the world's major central banks in tightening money supply to fight decade-high inflation. The world's third-largest economy would grow firmly and stably this year backed by accommodative monetary conditions although uncertainties such as inflation and the COVID-19 pandemic remain, Kuroda said. Adding to the uncertainty, the yen rebounded sharply on speculation the BOJ may start to turn away from its ultra-loose monetary policy after it widened the yield cap range on 10-year Japanese government bonds (JGBs) last month. Reporting by Yoshifumi Takemoto; Writing by Tetsushi Kajimoto; Editing by Jacqueline WongOur Standards: The Thomson Reuters Trust Principles.

TOKYO, Dec 27 (Reuters) - The Bank of Japan (BOJ) has modified its stimulus measures to ease the transition away from an unconventional monetary policy when Governor Haruhiko Kuroda retires in April, former top currency diplomat Takehiko Nakao told Reuters in an interview. "The BOJ has not succeeded so much in raising inflation expectations and bringing down real interest rates while side-effects became larger. "The yen was too strong back then, but now the yen is clearly too weak," Nakao said, declining to specify preferred levels under current circumstances. Nakao said Japan's waning economic power and its excessively expansionist policy are weighing on the yen and making Japanese assets vulnerable to takeovers by overseas investors. "It is helpful that raising interest rates lead to some strengthening of the yen."

☆ U.S. dollar likely has further upside vs yen despite BOJ move -Goldman
▼ + stars: | 2022-12-21 | by ( ) www.reuters.com time to read: +1 min

On Tuesday, the dollar plunged as much as 4% against the yen, its largest daily percentage fall since 1998. The U.S. currency, however, rebounded on Wednesday, and was last up 0.4% at 132.28 yen. Goldman assumed that, for now, the BOJ move was a technical adjustment and a "sign that policy rates could be adjusted further in coming month", although the basic BOJ framework remained unchanged. This should drive dollar/yen higher over the coming months, Goldman noted. For now, however, Goldman is closing its long dollar/yen position as the market is likely to price in a more meaningful BOJ policy change, which the U.S. investment bank said is a real possibility.

☆ Asia-Pacific markets trade mixed as Japanese stocks see second day of losses
▼ + stars: | 2022-12-21 | by ( Jihye Lee | ) www.cnbc.com time to read: +1 min

The Bank of Japan's surprise policy shift sent interest rates rising globally, as investors reacted to more evidence central bankers around the world will continue to pressure interest rates higher. I don't think there was anyone out there who expected it," said Ben Jeffrey, rate strategist at BMO. The announcement drove rates higher around the world, as yields on Japanese government bonds (JGBs) rose to 7-year highs. "They were definitely the last one standing in terms of being dovish, and now they're still dovish but less so," said Jeffrey. "It's obviously bearish JGBs and fixed income globally, but in the longer term it should help the yen which will make Treasurys more attractive to Japanese investors next year."

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