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☆ Asian shares subdued as jobs data raises odds of Fed rate hike
▼ + stars: | 2023-04-10 | by ( Ankur Banerjee | ) www.reuters.com time to read: +4 min

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was 0.14% higher, while Japan's Nikkei (.N225) gained 0.5%. China shares eased on Monday, with the bluechip CSI300 Index (.CSI300) 0.2% lower, while the Shanghai Composite Index (.SSEC) down nearly 0.3%. Markets are now pricing in 66% chance of the Fed raising interest rates by 25 basis points in its May 2-3 meeting, according to CME FedWatch tool. Traders have increasingly become convinced that the Fed will cut rates in the second half to ward off an economic downturn. In the currency market, the dollar index , which measures the U.S. currency against six major peers, rose 0.118% to 102.14.

☆ Japan's new central bank chief assumes office as global risks loom
▼ + stars: | 2023-04-10 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

[1/2] The Japanese government's nominee for the Bank of Japan (BOJ) Governor Kazuo Ueda speaks during a hearing session at the lower house of the parliament in Tokyo, Japan, February 24, 2023. The 71-year-old academic's term began on Sunday, succeeding Haruhiko Kuroda, whose second, five-year term ended on Saturday. Ueda and his two deputy governors, Shinichi Uchida and Ryozo Himino, will hold a joint news conference at 1015 GMT on Monday. Japan's long-stagnant inflation and wage growth are showing budding signs of change. Ueda served as BOJ board member from 1998 to 2005, during which the central bank introduced zero interest rates and then quantitative easing to combat deflation and economic stagnation.

☆ Yen sinks as rates outlook diverges; New Zealand dollar tumbles
▼ + stars: | 2023-04-10 | by ( ) www.cnbc.com time to read: +2 min

Yen, euro and U.S. dollar banknotes of various denominations. Meanwhile, the risk-sensitive New Zealand and Australian dollars weakened amid heightened U.S.-China tensions over Taiwan, with Beijing a key trading partner for the Antipodean nations. The yen slipped 0.4% against the U.S. dollar to 132.70, extending its decline from Friday, when data showed the U.S. economy continued to add jobs at a brisk pace in March. Barring an upside surprise in U.S. consumer price data on Wednesday, the dollar has limited room to rise against the yen from current levels, they added. Meanwhile, the New Zealand dollar slumped about 0.7% to $0.62325, and the Aussie slipped 0.13% to $0.6665.

☆ Ex-BOJ deputy governor Nakaso predicts tweak or end to YCC, Nikkei reports
▼ + stars: | 2023-04-08 | by ( ) www.reuters.com time to read: +2 min

"The increasing side-effects are a sign the policy effect (of YCC) is working its way through the economy," Nakaso said. "When the appropriate timing comes, the BOJ's new leadership will likely modify or abolish YCC," or yield curve control. The next challenge will be to end negative interest rates and start a full-fledged policy normalisation, Nakaso said. Under YCC, the BOJ guides short-term interest rates at -0.1% and caps the 10-year bond yield around zero as part of efforts to sustainably hit 2% inflation. Nakaso, who had been considered among candidates to succeed Kuroda, served as deputy BOJ governor for five years until 2018.

☆ Kuroda less dovish as he departs BOJ after decade of massive stimulus
▼ + stars: | 2023-04-07 | by ( ) www.cnbc.com time to read: +4 min

Haruhiko Kuroda, governor of the Bank of Japan (BOJ), at the central bank's headquarters in Tokyo, Japan, on Thursday, May 27, 2021. Haruhiko Kuroda, governor of the Bank of Japan (BOJ), at the central bank's headquarters in Tokyo, Japan, on Thursday, May 27, 2021. Kuroda was not the first BOJ chief to attempt to influence public perceptions with monetary easing. When allusions to Peter Pan and spacecraft failed, the BOJ shifted to a defensive, long-term approach in 2016 with the introduction of yield curve control (YCC). "The BOJ's failure to change public expectations raises a lot of questions about the effectiveness of unconventional monetary policy."

☆ Kuroda departs BOJ after inflation fails to fly like 'Peter Pan'
▼ + stars: | 2023-04-07 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

The 78-year-old gives his press conference at 0630GMT, the Bank of Japan (BOJ) said. Kuroda was not the first BOJ chief to attempt to influence public perceptions with monetary easing. In 2015, he alluded to the Peter Pan fairy tale in explaining that to fire up inflation, the BOJ needed to have the public believe in its monetary magic with massive stimulus. When allusions to Peter Pan and spacecraft failed, the BOJ shifted to a defensive, long-term approach in 2016 with the introduction of yield curve control (YCC). "The BOJ's failure to change public expectations raises a lot of questions about the effectiveness of unconventional monetary policy."

TOKYO, April 7 (Reuters) - The Bank of Japan (BOJ) should be cautious about changing its unconventional monetary policy for now, given financial market uncertainty due to problems in Western banks, former top financial diplomat Takehiko Nakao told Reuters in an interview. Nakao made the comments amid speculation the BOJ may abandon its yield curve control policy when new Governor Kazuo Ueda takes over incumbent Haruhiko Kuroda, whose term ends on April 8. U.S. bank failures and the buyout of Credit Suisse by UBS last month have driven financial market risk aversion. Nakao said the BOJ must carefully monitor market developments, for now, although credit anxiety was unlikely to morph into anything like the 2008/09 global financial crisis. "Yet, the BOJ cannot continue unconventional monetary policy, including ETF and REIT purchases and YCC, indefinitely.

☆ Analysis: New BOJ chief to slowly unwind Kuroda's policy experiment
▼ + stars: | 2023-04-06 | by ( Leika Kihara | ) www.reuters.com time to read: +5 min

In a sign he will be in no rush to shift policy, Ueda told a parliamentary confirmation hearing in February that he will "spend time and engage in thorough discussions" with BOJ board members on how to address the side-effects of prolonged easing. But a closer look at his past, more candid remarks as a private-sector economist, and as a BOJ board member during Japan's battle with deflation in the late 1990s, offers a glimpse of his policy and communication style. Removing YCC altogether will deprive the BOJ tools to combat an unwelcome spike in bond yields, says former board member Takahide Kiuchi. Accounts of his days as BOJ board member also suggest Ueda is no fan of heavy money printing. Both in the confirmation hearings and in past remarks as board member, he has stressed the importance of using communication to enhance the effects of monetary policy.

☆ Take Five: An uneasy calm
▼ + stars: | 2023-04-06 | by ( ) www.reuters.com time to read: +5 min

Kazuo Ueda takes over the helm at the Bank of Japan while U.S. bank earnings kick off and Switzerland's parliament debates the UBS-Credit Suisse tie up. 1/ BANKS' BOTTOM LINESThe uneasy calm that has settled over the U.S. banking sector after the collapse of Silicon Valley Bank will be tested as U.S. financials kick off their earnings season. S&P 500 earnings are predicted to fall 5.0%, I/B/E/S data from Refinitiv showed. Reuters Graphics5/ SPRING MEETINGSPolicymakers and investors head to Washington for the World Bank and International Monetary Fund Spring meetings starting on Monday. It will be the first meeting for Ajay Banga, U.S. nominee to run the World Bank and sole contender for the job.

☆ Japan's economy runs below capacity, low rates may stay in place
▼ + stars: | 2023-04-05 | by ( ) www.reuters.com time to read: +1 min

TOKYO, April 5 (Reuters) - Japan's economic output ran below full capacity for the 11th straight quarter in October-December, central bank data showed on Wednesday, suggesting that conditions for ending ultra-low interest rates have yet to fall into place. Japan's output gap, which measures the difference between an economy's actual and potential output, stood at -0.43% in the fourth quarter, widening from -0.08% in July-September, Bank of Japan (BOJ) data showed. A negative output gap occurs when actual output is less than the economy's full capacity, and is considered a sign of weak demand that typically puts downward pressure on inflation. Japan's economy expanded by an annualised 0.1% in the October-December period, only narrowly averting a recession as capital expenditure and consumption remained weak. While an end to COVID-19 curbs is underpinning consumption, growing signs of slowdown in overseas demand are clouding the outlook for Japan's export-reliant economy.

While factory output rebounded in February, some analysts warn of mounting downside risks as slumping global demand for technology goods hits the country's exports. Inflation will probably stay elevated at least during the first half of this year," said Yoshiki Shike, chief economist at Dai-ichi Life Research Institute. Separately, factory output rose 4.5% in February from January, better than a forecast 2.7% gain and rebounding from a revised 5.3% drop in January, on easing supply bottlenecks for carmakers. "There's a bigger risk of a downgrade in manufacturers' output plans due to weaknesses in the information-technology (IT) sector. Global demand is shifting away from goods towards services, which is bad news for Japan's export-reliant economy," Shinke of Dai-ichi Life Research said.

The data underscores the challenge incoming Bank of Japan (BOJ) Governor Kazuo Ueda faces in assessing whether the recent cost-driven inflation will shift to one backed by solid demand and wage growth. The pace of increase slowed from a 3.3% gain in February and a nearly 42-year high of 4.3% hit in January, due largely to the effect of government subsidies to curb utility bills. In a glimmer of hope, factory output rose 4.5% in February from the previous month, government data showed on Friday, more than a median market forecast for a 2.7% gain. Manufacturers surveyed by the government expect to increase output by 2.3% in March and by 4.4% in April, the output data showed. Reporting by Takahiko Wada and Leika Kihara; Editing by Sam Holmes and Jacqueline WongOur Standards: The Thomson Reuters Trust Principles.

The finance ministry will set up a panel of experts as early as April to discuss the feasibility of issuing a digital yen, two sources with knowledge of the matter told Reuters. The step will come after the central bank's decision to start in April a pilot programme to test the use of a digital yen, moving Japan closer to issuing a CBDC in several years. The central bank has said the pilot programme may last for several years. Some laws may need to be revised if the government were to start issuing a CBDC for public use. Public broadcaster NHK reported on Thursday the finance ministry was considering setting up an advisory panel in April to discuss the possibility of a digital yen.

☆ BOJ's new deputy chief flags chance of change to yield control policy
▼ + stars: | 2023-03-29 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

"If various conditions fall in place, some sort of change to yield curve control may become necessary. If conditions turn positive, (a tweak) will undoubtedly become a possibility," Uchida told parliament. Uchida said trend inflation was "extremely important" in judging whether Japan will sustainably meet the BOJ's 2% price target. Rather than focusing on a particular set of indicators, however, the central bank will look comprehensively at various data in setting monetary policy, he added. A career central banker, Uchida is one of two deputy governors.

Asian markets could rebound on Tuesday from their sluggish start to the week, after a deal to buy the assets of stricken U.S. bank Silicon Valley Bank (SVB) prompted a relief rally in financials and allayed fears of deeper systemic stress. Treasury's sale of $43 billion five-year notes on Tuesday and $35 billion of seven-year notes on Wednesday will be worth monitoring. There are no central bank policy decisions on Tuesday, but investors can expect a slew of headlines from central bank officials around the world to hit their screens. In Asia, Bank of Japan governor Haruhiko Kuroda gives a speech, and finance ministers and central bank governors of the ASEAN nations attend a three-day summit in Bali. European Central Bank and Bank of England chiefs Christine Lagarde and Andrew Bailey head a raft of European policymaker events.

☆ Central banks stick to rate hikes with eye on market turmoil
▼ + stars: | 2023-03-23 | by ( ) www.reuters.com time to read: +5 min

Overall, 10 developed economies have raised rates by a combined 3,290 basis points (bp) in this cycle to date. Reuters Graphics1) UNITED STATESThe Fed raised rates by a quarter point on Wednesday, continuing its most aggressive series of hikes since the 1980s. After setting its policy rate to 4.75%-5.00%, the Fed hinted it may soon pause rate rises. Reuters Graphics3) CANADAThe Bank of Canada on March 8 became the first major central bank to halt monetary tightening during this cycle. Reuters Graphics5) AUSTRALIAAustralia's central bank raised its key rate by a quarter point to 3.6% in March, the highest since May 2012, but hinted rate hikes may be over for now.

With inflation still exceeding the Bank of Japan's 2% target, the data will keep alive market expectations of a near-term tweak to its bond yield control policy, analysts say. The core consumer price index (CPI), which excludes volatile fresh food but includes oil products, rose 3.1% in February from a year earlier, government data showed, matching a median market forecast and slowing sharply from a 41-year high of 4.2% seen in January. "The new BOJ leadership will scrutinise Japan's price trend, as well as U.S. and European developments, in deciding its policy move," he said. But some BOJ policymakers have flagged the chance inflation could exceed initial expectations, as price hikes and wage gains show sign of broadening. Reporting by Takahiko Wada and Leika Kihara; Editing by Sam HolmesOur Standards: The Thomson Reuters Trust Principles.

☆ ECB goes big on rates but bank turmoil clouds central banks' outlook
▼ + stars: | 2023-03-16 | by ( ) www.reuters.com time to read: +5 min

Overall, 10 big developed economies have raised rates by a combined 3,165 basis points (bps) in this cycle to date. Reuters Graphics3) CANADAThe Bank of Canada on March 8 became the first major central bank to halt monetary tightening during this cycle. Reuters Graphics6) NORWAYNorway's central bank meets next week and is expected to raise rates by 25 bps to contain above-target inflation. Reuters Graphics10) JAPANThe Bank of Japan, the most dovish major global central bank, maintained ultra-low interest rates at its March meeting, the final one for retiring BOJ governor Haruhiko Kuroda. The BOJ resisted changing its controversial yield curve control policy, which it uses to cap interest rates on longer-term debt.

☆ BOJ debated feasibility of tweaking yield control in January, minutes show
▼ + stars: | 2023-03-15 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

At the January meeting, the BOJ maintained its ultra-low interest rates, including a bond yield cap it was struggling to defend, defying market expectations it would phase out its massive stimulus programme amid mounting inflationary pressure. "The BOJ must keep various options in mind in guiding monetary policy. But with overseas economies slowing now, it's inappropriate to rush towards an exit" from ultra-easy policy, another board member said, according to the minutes. Under yield curve control (YCC), the BOJ guides short-term rates at -0.1% and the 10-year bond yield around zero as part of efforts to sustainably hit its 2% inflation target. Instead of tweaking YCC, the BOJ modified its funds-supply market operation in January to use it as a new tool to prevent long-term rates from rising too much.

☆ Bank of Japan Keeps Rates Unchanged at Kuroda’s Final Meeting
▼ + stars: | 2023-03-10 | by ( Megumi Fujikawa | ) www.wsj.com time to read: 1 min

The BOJ kept its interest-rate targets unchanged at Gov. Haruhiko Kuroda’s final meeting. TOKYO—The Bank of Japan kept its interest-rate targets unchanged Friday at Gov. Haruhiko Kuroda ’s final meeting after 10 years on the job, but analysts expect policy to shift under his successor, Kazuo Ueda. The bank maintained its cap on the 10-year Japanese government bond yield at 0.5% and kept short-term interest rates at minus 0.1%.

☆ Morning Bid: Jumpy around jobs
▼ + stars: | 2023-03-10 | by ( ) www.reuters.com time to read: +2 min

A look at the day ahead in European and global markets from Vidya RanganathanFed Chairman Jerome Powell has made sure there is heightened focus on today's U.S. payrolls data. In his speech to Congress, Powell curiously mentioned this data point as one among a couple of indicators framing the Fed's thinking around how far and fast interest rates need to rise. The nail-biting around payrolls has meant investors barely reacted to other unsurprising but orchestrated developments in Asia. Haruhiko Kuroda concluded his last policy meeting as Bank of Japan governor, leaving Japan's ultra-low interest rates and controversial bond yield control policy an issue for successor Kazuo Ueda to tackle. Reuters GraphicsKey developments that could influence markets on Friday:U.S. February payrollsU.K. January industrial productionReporting by Vidya Ranganathan; Editing by Christopher CushingOur Standards: The Thomson Reuters Trust Principles.

☆ 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.

☆ Bank of Japan keeps low rates as Kuroda sticks to script at swan song meeting
▼ + stars: | 2023-03-10 | by ( ) edition.cnn.com time to read: +4 min

At its two-day meeting that ended on Friday, the BOJ maintained its short-term interest rate target at -0.1% and that for the 10-year bond yield around 0%. It also left unchanged a band set around the 10-year yield target that allows the yield to rise up to 0.5%. “The decision to uphold policy rates comes at a cost. Many investors expect the central bank to phase out YCC when Kuroda’s successor, Kazuo Ueda, takes the helm in April. “The BOJ will likely abandon its 10-year bond yield target, while maintaining negative interest rates, to arrest distortions in the yield curve,” he said.

☆ Asia-Pacific markets set to fall ahead of crucial U.S. jobs data, Bank of Japan decision
▼ + stars: | 2023-03-10 | by ( Jihye Lee | ) www.cnbc.com time to read: 1 min

Horizontal cityscape against clear sky at Tokyo bay area. Illuminated skyscrapers and Tokyo Tower in the dusk. Stocks in the Asia-Pacific are set to fall on Friday, as investors await the closely watched February non-farm payrolls report from the U.S. that could further determine the direction on the Federal Reserve's rate hikes ahead. In Australia, the S&P/ASX 200 opened with sharp losses, tumbling 1.5% — continuing the selloff seen in the U.S. The Nikkei futures contract in Chicago was at 28,095 while its counterpart in Osaka was at 28,000 against the Nikkei 225's last close at 28,623.

☆ Dollar loses steam after jobless claims data, while Kuroda takes center stage in Asia
▼ + stars: | 2023-03-10 | by ( ) www.cnbc.com time to read: +3 min

An employee deals with U.S. one-hundred dollar banknotes at a bank on June 16, 2022 in Hai an, Nantong City, Jiangsu Province of China. The yen held steady in early Asia trade, and was last 0.2% higher at 135.89 per dollar, retreating from a nearly three-month low hit earlier in the week. Nonetheless, the jump in jobless claims was enough to cause traders to unwind some bets that U.S. rates would rise much higher than previously expected. The Fed funds rate is projected to peak just below 5.5% by July. Against a basket of currencies, the U.S. dollar index fell 0.12% to 105.12 but remained on track for a weekly gain of nearly 0.6%.

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