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☆ Japan's wholesale inflation stays elevated, keeps BOJ under pressure
▼ + stars: | 2023-02-10 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

Japan's core consumer prices rose 0.3 percent in April from a year earlier, government data showed on May 29, keeping inflation distant from the central bank's 2 percent target. The increase in the corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, largely met a median market forecast for a 9.6% gain. The index, at 119.8, matched a record high hit in December, Bank of Japan (BOJ) data showed. "Firms have yet to fully pass on past rises in input costs, which is keeping inflationary pressure high," said Takeshi Minami, chief economist at Norinchukin Research Institute. "We expect the pace of inflation to gradually slow in the latter half of fiscal 2023," he told parliament.

☆ Morning Bid: Volatility stirs
▼ + stars: | 2023-02-10 | by ( ) www.reuters.com time to read: +5 min

World markets end a rough week of confusing and competing narratives in distinctly edgy form, with peculiarly subdued volatility gauges flickering back to life. Both 10 and 30-year yields hit their highest levels in over a month early on Friday. Job shedding in the digital sector continued, with Yahoo's plans to lay off more than 20% of its total workforce. That said, the year-on-year oil price trend continues to be negative, as it's been all year and base effects from last year's price spike around the Ukraine invasion will only deepen that and weigh on headline inflation further. Goldman Sachs lowered its oil price forecasts for this year and next, cutting its Brent 2023 price forecast by $6 to $92 per barrel - still above current levels around $86.

☆ Take Five: The truth about inflation
▼ + stars: | 2023-02-10 | by ( ) www.reuters.com time to read: +5 min

That puts Tuesday's U.S. inflation data on the must-watch list. 1/ INFLATION BETSurprisingly strong January U.S. jobs data forced markets to rethink the view that interest rates will peak soon. Now, Tuesday's latest inflation figure is the next big test for where the Federal Reserve takes rates in coming months. Stock markets are confident that the Fed can bring down inflation without triggering a sharp growth slowdown. January's inflation report on Wednesday could show double-digit price rises, meaning no respite yet on the interest-rate front.

Tokyo, Feb 10 (Reuters) - Japan's government is likely to appoint Kazuo Ueda, an academic and a former member of the central bank's policy board, as the Bank of Japan's next governor, the Nikkei newspaper reported on Friday. The government will also nominate Ryozo Himino, former head of Japan's banking watchdog, and BOJ executive Shinichi Uchida as deputy governors, the Nikkei said. The government initially sounded out incumbent Deputy Governor Masayoshi Amamiya for the top BOJ job, but he declined, the Nikkei reported without citing sources. The yen strengthened from around 131.55 yen per dollar to around 130.60 after the Nikkei report. In an opinion piece that ran on the Nikkei in July last year, Ueda said warned the BOJ against prematurely raising interest rates just because inflation briefly exceeded 2%.

☆ Factbox: Kazuo Ueda: Who is the new Bank of Japan governor and what can we expect from him?
▼ + stars: | 2023-02-10 | by ( ) www.reuters.com time to read: +4 min

TOKYO, Feb 10 (Reuters) - Japan's government is likely to appoint Kazuo Ueda, an academic and a former member of the Bank of Japan's policy board, as the next central bank governor, two government officials told Reuters on Friday. The 71-year-old is widely seen as an expert on monetary policy, but is seen as a surprise appointment by analysts. The following are some key questions and answers about the next central bank governor in the world's third-largest economy and the challenges he faces. He is an external director at JGC Holdings Corp (1963.T), an engineering company and at the state-owned Development Bank of Japan. In a 2016 article, Ueda wrote that the BOJ's ultra-easy policy seemed to be "reaching its limits".

☆ BOJ's deputy governor Amamiya sees no imminent need to tweak YCC
▼ + stars: | 2023-02-10 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

"YCC is an extraordinary policy, so we must carefully balance the benefits and costs," Amamiya said. "For now, I don't see the need to make further steps to enhance the flexibility of YCC," he added. The government will present its nominees for the new BOJ governor and two deputies to parliament on Feb. 14, a ruling party lawmaker told reporters on Friday. Analysts see Amamiya as being more dovish on monetary policy than other contenders like former deputy governors Hiroshi Nakaso and Hirohide Yamaguchi. He stressed the need to maintain current stimulus to ensure inflation hits the BOJ's 2% target in a sustainable manner.

☆ Japanese yen jumps on report Kazuo Ueda will be next governor of the central bank
▼ + stars: | 2023-02-10 | by ( Jenni Reid | ) www.cnbc.com time to read: +1 min

The Bank of Japan left its monetary policy unchanged on Wednesday. The Japanese yen pushed higher against both the euro and U.S. dollar on Friday after a Nikkei report said Kazuo Ueda would be appointed as the Bank of Japan's next governor. Economist Ueda is a former member of the central bank's policy board. Kuroda has overseen the BOJ's policy of ultra-low interest rates while other major central banks have been hiking to tackle inflation. However, Muto added, he may not be a "super hawkish type" – so any "normalization" would take place very slowly.

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.

☆ S&P warns of possible economic blow, hit to Japan Inc from BOJ rate hike
▼ + stars: | 2023-02-09 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

TOKYO, Feb 9 (Reuters) - A future Bank of Japan (BOJ) interest rate hike could affect the country's sovereign debt rating if firms struggle to absorb rising funding costs, an official at S&P Global Ratings said on Thursday. Japanese bond yields have crept up on market expectations the BOJ will phase out its yield control policy and start raising interest rates under a new governor who succeeds incumbent Haruhiko Kuroda in April. S&P expects the BOJ to tighten policy only gradually with the near-term impact on the economy likely limited, Tan added. S&P currently assigns an "A+" long-term and "A-1" short-term sovereign debt ratings on Japan. The outlook on the long-term rating is stable.

☆ Japan's Kishida says global communication skills key criteria for picking new BOJ head
▼ + stars: | 2023-02-08 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

"I'd like to select (the next BOJ governor) taking these factors into account," Kishida said, when asked by an opposition lawmaker what the qualifications Kuroda's successor must have. Markets are closely watching the appointment of the new BOJ governor for clues on how quickly the central bank could phase out its massive stimulus programme. The government is considering presenting to parliament its nominees for next BOJ governor and two deputy governors next week, sources told Reuters. Kishida had earlier said no decision had been made, after the Nikkei newspaper reported on Monday the government has sounded out BOJ Deputy Governor Masayoshi Amamiya to succeed Kuroda. Among other key contenders, former BOJ Deputy Governor Hiroshi Nakaso has long experience overseeing the BOJ's market operations and international affairs.

Investors will be looking for Powell's take on the labor market in a speech at the Economic Club of Washington due later in the day, after a sharp rise in jobs growth last week punctured hopes for a tempered Fed. "We expect Chair Powell to emphasize stubbornness in underlying inflation pressures while highlighting the labor market’s strength and capacity to withstand higher rates." U.S. interest-rate futures show that markets are expecting the Fed funds rate to peak just above 5.1% by June, compared with expectations of a peak below 5% prior to Friday's jobs report. "The Fed still has some progress to make, there are signs of positivity in terms of the disinflationary pressures that are in the pipeline, but there is still a labor market problem." Sterling was last 0.4% down against the dollar at $1.1982, after tumbling to a one-month low of $1.1974 in the previous session.

☆ Dollar rally pauses ahead of Powell speech; Aussie lifted by hawkish RBA
▼ + stars: | 2023-02-07 | by ( Rae Wee | ) www.reuters.com time to read: +4 min

The dollar index , which measures the greenback against a basket of six rivals, made a brief breach of Monday's one-month highs, and was last trading at 103.52, roughly flat on the day. Sterling was last 0.1% higher against the dollar at $1.20275, after tumbling to a one-month low of $1.2006 in the previous session. In Asia, the Japanese yen attempted to make back Monday's losses, with the dollar-yen pair down 0.6% at $131.78, moving away from Monday's one-month low of 132.90 per dollar. A newspaper report on Monday said Japan's government has sounded out Bank of Japan (BOJ) Deputy Governor Masayoshi Amamiya to succeed incumbent Haruhiko Kuroda as central bank governor. Reporting by Rae Wee and Susan Mathew; Editing by Muralikumar Anantharaman, Kenneth Maxwell and Arun KoyyurOur Standards: The Thomson Reuters Trust Principles.

☆ Dollar pauses bullish run; Aussie jumps after RBA rate decision
▼ + stars: | 2023-02-07 | by ( Rae Wee | ) www.reuters.com time to read: +3 min

The Australian dollar, meanwhile, surged in the aftermath of the Reserve Bank of Australia's (RBA) interest rate decision, rising as much as 1% to an intra-day high of $0.6952. The RBA on Tuesday raised its cash rate by an expected 25 basis points, and signalled further rate hikes ahead. Sterling was last 0.27% higher at $1.2054, after tumbling to a one-month low of $1.2006 in the previous session. U.S. Treasury yields have risen on the back of higher rate expectations, with two-year yields touching a one-month high of 4.4930% on Monday. Elsewhere in Asia, the Japanese yen rose 0.3% to 132.24 per dollar, but remained pinned near Monday's one-month low of 132.90 per dollar.

☆ Dollar climbs as Treasury yields pop on further Fed hike forecasts
▼ + stars: | 2023-02-07 | by ( Rae Wee | ) www.reuters.com time to read: +3 min

Markets were still reeling from the shock of Friday's jobs report, which showed that non-farm payrolls surged by an eye-watering 517,000 in January, well above expectations. "I don't think the jobs number is key ... but it's definitely a major impact on (the Fed's) monetary policy." U.S. Treasury yields have risen on the back of higher rate expectations, with two-year yields touching a one-month high of 4.493% on Monday. Futures pricing show that markets are expecting the Fed funds rate to peak just above 5.1% by July, compared with expectations of less than 5% prior to Friday's jobs report. Elsewhere in Asia, the Japanese yen rose 0.2% to 132.37 per dollar, but remained pinned near Monday's one-month low of 132.90 per dollar.

☆ Morning Bid: Bursting bubbles
▼ + stars: | 2023-02-06 | by ( Alun John | ) www.reuters.com time to read: +3 min

LONDON, Feb 6 (Reuters) - A look at the day ahead in U.S. and global markets from Alun John. China's yuan hit a four-week low in both on and offshore markets Monday , and Chinese stocks sold off. The offshore yuan was last at 6.784 per dollar, having firmed from the 6.832 per dollar it hit in early trade. ING say a move into the 6.85-6.9 range would show investors are including more negative trade implications in their thinking. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

The RBA is expected to deliver a fourth consecutive quarter-point interest rate hike to 3.35%, after inflation unexpectedly rose last year to a 33-year high of 7.8%. However, figures on Monday showed retail sales are falling for the first time in a year, a sign that higher rates are maybe starting to bite. chartGenerally speaking, Asian markets are feeling the heat from the sudden U.S. interest rate outlook shift following January's freakishly strong U.S. jobs report released on Friday. This may be the tightening of financial conditions Fed Chair Powell and his colleagues are seeking. The MSCI Asia ex-Japan index slumped 2.4% on Monday, its worst day since June last year, Chinese stocks had their worst day this year (blame Beijing-Washington tensions too) and Hong Kong tech stocks fell 3.6%.

☆ Kuroda defends BOJ's current stimulus as best way to hit inflation target
▼ + stars: | 2023-02-06 | by ( ) www.reuters.com time to read: 1 min

TOKYO, Feb 6 (Reuters) - Bank of Japan Governor Haruhiko Kuroda on Monday defended his decade-long stimulus programme, saying there was "no better way" to aim at sustainably achieving its 2% inflation target. "With our monetary easing steps, we sought to stimulate economic activity and tighten the labour market so that prices and wages would rise more," Kuroda told paraliament. "This was a necessary approach and one that is shared by other central banks," he said. Reporting by Leika Kihara; Editing by Kim CoghhillOur Standards: The Thomson Reuters Trust Principles.

☆ Dollar on the front foot after robust U.S. jobs data, yen falters
▼ + stars: | 2023-02-06 | by ( Ankur Banerjee | ) www.reuters.com time to read: +3 min

The yen weakened to a three-week low of 132.60 per dollar after the report, and was last fetching 132.35, down 0.88%. Tapas Strickland, head of market economics at National Australia Bank, said Amamiya dovish policy credentials are raising uncertainty about BOJ's eventual exit from its ultra-easy monetary stance. The BOJ's loose policy settings have attracted increasing criticism from many quarters, including opposition politicians and traders, for distorting market function. But he also said in July the BOJ must "always" think about the means of exiting ultra-loose monetary policy. On Friday, the U.S. Labor Department's closely watched employment report showed that nonfarm payrolls surged by 517,000 jobs last month.

☆ Japan needs stable, sustained inflation, government executive says
▼ + stars: | 2023-02-05 | by ( ) www.reuters.com time to read: +1 min

TOKYO, Feb 5 (Reuters) - Japanese Deputy Chief Cabinet Secretary Seiji Kihara on Sunday stressed the need to achieve an economy where inflation rises stably and sustainably, when asked whether the next central bank governor should maintain ultra-easy monetary policy. "What's important is to create economic conditions where prices rise stably and sustainably," Kihara told a television programme. "As for the next BOJ governor, the prime minister will choose who he thinks is the most appropriate person," he said. "It's important for monetary, and the broader macro-economic policy, to be stable." Reporting by Leika Kihara; Editing by Lincoln Feast.

☆ Factbox: Who are candidates to become next BOJ governor?
▼ + stars: | 2023-02-05 | by ( Leika Kihara | ) www.reuters.com time to read: +5 min

The Nikkei newspaper reported the government has sounded out BOJ Deputy Governor Masayoshi Amamiya as the next governor, citing anonymous government and ruling party sources. The government will present a nominee for BOJ governor, and that for two deputy governors, to parliament later this month. But he also said in July the BOJ must "always" think about the means of exiting ultra-loose monetary policy. FEMALE DEPUTY GOVERNOR CANDIDATESNo female has yet served as BOJ deputy governor or governor, a tradition Kishida may seek to change to enhance diversity. FINANCIAL BUREAUCRAT DEPUTY GOVERNOR CANDIDATESIf a former BOJ executive becomes governor, there is a strong chance one of the deputy governor posts will be filled by top finance ministry bureaucrats such as Shigeaki Okamoto and Yasushi Kinoshita.

☆ Japan government has sounded out Amamiya about becoming BOJ governor -Nikkei
▼ + stars: | 2023-02-05 | by ( ) www.reuters.com time to read: +2 min

The next BOJ chief will face the delicate task of normalising ultra-loose monetary policy, which is drawing increasing public criticism for distorting market function. A career central banker who has drafted many of the BOJ's monetary easing tools, Amamiya has been seen by markets as a top contender to take over as next governor. The Nikkei report did not say whether Amamiya accepted the offer. The prime minister's office and the BOJ were not immediately available to comment on the Nikkei report outside of regular office hours. Amamiya and Masazumi Wakatabe are currently serving as deputy governors, but their five-year terms end on March 19.

☆ BOJ's deputy governor warns against watering down inflation target
▼ + stars: | 2023-02-02 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

Wakatabe, a vocal proponent of aggressive monetary easing, said watering down the inflation target risked making the objective of the BOJ's monetary policy too vague. "It could undermine the transparency of monetary policy and its effectiveness," he said in a speech. But there was uncertainty on whether such changes in the price outlook would be sustained and help Japan achieve the inflation target in a sustainable manner, he said. The outcome of annual wage negotiations between businesses and unions would be crucial, Wakatabe said, stressing the importance of achieving solid wage increases for Japan to see inflation sustainably meet the BOJ's price target. "The BOJ will continue to conduct monetary policy with the aim of achieving its 2% inflation target, accompanied by wage increases," Wakatabe said.

The massive buying highlights the increasing difficulty the central bank faces in sustaining its yield control policy, as inflation perks up well above its 2% inflation target. With its heavy-handed intervention drying up bond market liquidity, the BOJ is increasingly relying on a new funds-supply tool to keep the 10-year yield from breaching its 0.50% ceiling. The BOJ's bond buying in January, at 23.69 trillion yen ($182 billion), was the biggest amount on record and exceeded the previous high of 16.2 trillion yen marked in June 2022, central bank data showed. Under yield curve control, the BOJ guides short-term interest rates at -0.1% and the 10-year bond yield around 0%. The 10-year bond yield stood at 0.480% on Wednesday, remaining close to the BOJ's 0.5% cap.

☆ BOJ Kuroda stresses need to maintain ultra-easy policy
▼ + stars: | 2023-01-30 | by ( ) www.reuters.com time to read: 1 min

TOKYO, Jan 30 (Reuters) - Bank of Japan Governor Haruhiko Kuroda on Monday stressed the importance of maintaining ultra-loose monetary policy to support the economy and prod companies to raise wages. "Japan's trend inflation is likely to gradually accelerate ... but that will take some more time," Kuroda told parliament. "Uncertainty regarding Japan's economy is extremely high. It's therefore important now to support the economy, and create an environment where companies can raise wages," he said. Reporting by Leika Kihara; Editing by Tom HogueOur Standards: The Thomson Reuters Trust Principles.

☆ India is a true bright spot in the midst of a global downturn, top execs and policymakers say
▼ + stars: | 2023-01-27 | by ( Jenni Reid | ) www.cnbc.com time to read: +5 min

But India does shine out among the world's biggest economies, with Europe hovering on the brink of potential recession and U.S. growth slowing. "It's for the whole digital India, and creating a digital society in India," Ekholm told CNBC. watch nowIndia, he continued, "will very shortly have the best digital infrastructure outside of China," driven by telecoms juggernauts Bharti Airtel and Jio, he added. Strong tailwinds"We are very optimistic and very positive on India," the chief executive of Tata Consultancy Services, Rajesh Gopinathan, told CNBC. As Anish Shah, chief executive of Mahindra Group, told CNBC: "India will get impacted.

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