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[1/2] A shopper looks at packs of vegetables at a market at a shopping district in Tokyo, Japan, December 6, 2015. To match JAPAN-ECONOMY/TANKAN REUTERS/Yuya ShinoJan 20 (Reuters) - A look at the day ahead in Asian markets from Jamie McGeever. Japanese consumer price inflation is expected to have hit a new 41-year high of 4.0% in December, up from 3.70%. chartThis will mark the ninth straight month of inflation above the BOJ's 2% target. Risk appetite in Japan is holding up well, with the Nikkei 225 on course for its best week since November.

If inflation stays around 2% and Japan sees significant wage hikes, the BOJ could normalise monetary policy. "Supply shock is behind the recent pick-up in inflation," said Yasunari Ueno, chief market economist at Mizuho Securities. Dai-ichi Life's Shinke expects core consumer inflation to accelerate further in January, before slowing due to the effect of government subsidies aimed at curbing utility bills. The base effect of last year's sharp rise in consumer prices will also slow the pace of increase in inflation later this year, analysts say. BOJ Governor Haruhiko Kuroda, whose term will end in April, has stressed the need to keep monetary policy ultra-loose until wages rise more, changing the recent cost-push inflation into inflation driven by robust domestic demand.

☆ Stocks buoyed by cheery data after BOJ damp squib
▼ + stars: | 2023-01-18 | by ( Nell Mackenzie | ) www.reuters.com time to read: +4 min

Data showed British inflation dropped to a three-month low of 10.5% in December, the latest sign that global inflationary pressures are abating. Also helped by a string of positive earnings updates, Europe's STOXX 600 index (.STOXX) rose 0.4% to its highest level since April 2022. Earlier in the day MSCI's broadest index of Asia-Pacific shares outside of Japan (.MIAPJ0000PUS) rose 0.24%, and S&P 500 futures gained 0.26%. The dollar at one point rose as much as 2.7% against the Japanese yen, but was last 0.78% higher at 129.11. Data on Tuesday showed China's economic growth had slumped in 2022 to 3.0% - the weakest rate in nearly half a century.

"This step will allow us to push down longer-term interest rates, without directly affecting supply and demand of the cash Japanese government bond (JGB) market," Kuroda told a news conference. Following its two-day policy meeting, the BOJ kept intact its yield curve control (YCC) targets, set at -0.1% for short-term interest rates and around 0% for the 10-year yield, by a unanimous vote. Reuters Graphics Reuters GraphicsThe central bank also made no change to its guidance that allows the 10-year bond yield to move 50 basis points either side of its 0% target. "By showing its resolve to use market tools more flexibly, the BOJ wanted to signal to markets it won't make big monetary policy changes under Kuroda." Market attention is already shifting toward monetary policy under Kuroda's successor, who will need to steer an orderly exit from decades of ultra-low rates.

☆ Japan yields tumble to well below policy cap as BOJ stands pat
▼ + stars: | 2023-01-18 | by ( Kevin Buckland | ) www.reuters.com time to read: +3 min

[1/2] A Japan Yen note is seen in this illustration photo taken June 1, 2017. The yield was at 0.51% prior to the Bank of Japan decision. "If they had expanded the band again or terminated YCC, yields would rise, which would be a de facto rate hike for a second consecutive meeting," said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities. The BOJ also made use of a newly announced policy tool immediately, offering five-year loans to financial institutions to enhance liquidity, and showing its resolve to keep yields low. At the post-meeting press conference, Kuroda defended the change, reiterating that widening the yield band has made YCC "fully sustainable".

☆ Despite Pressure, Bank of Japan Keeps Interest-Rate Targets Unchanged
▼ + stars: | 2023-01-18 | by ( Megumi Fujikawa | ) www.wsj.com time to read: 1 min

Bank of Japan Gov. Haruhiko Kuroda has devoted his term to keeping interest rates ultralow. TOKYO—The Bank of Japan kept its interest-rate targets unchanged Wednesday despite strong pressure from investors on the bank’s new 0.5% cap for the 10-year government bond yield. The Japanese central bank decided to leave short-term interest rates at minus 0.1% and its target for the 10-year Japanese government bond yield at around zero. The bank reiterated that it intends to cap that yield at 0.5%.

The surprise decision sent the yen skidding against other currencies and bond yields tumbling the most in decades, as investors unwound bets they made anticipating the central bank would overhaul its yield control policy. At a two-day policy meeting, the BOJ kept intact its yield curve control (YCC) targets, set at -0.1% for short-term interest rates and around 0% for the 10-year yield, by a unanimous vote. The central bank also made no change to its guidance that allows the 10-year bond yield to move 50 basis points either side of its 0% target. Underscoring its resolve to keep defending the cap, the BOJ beefed up a key market operation tool to more effectively curb rises in long-term interest rates. "By showing its resolve to use market tools more flexibly, the BOJ wanted to signal to markets it won't make big monetary policy changes under Kuroda."

☆ Japan yields tumble below policy cap after BOJ keeps status quo
▼ + stars: | 2023-01-18 | by ( Kevin Buckland | ) www.reuters.com time to read: +2 min

The 10-year yield was last down 10.5 basis points at 0.395%, which would mark the biggest one-day decline in seven years. It was at 0.51% prior to the BOJ decision. Ten-year JGB futures jumped when they resumed trading following the midday break, trading up as much as 1.81 points to 146.65, the highest since Dec. 20. "If they had expanded the band again or terminated YCC, yields would rise, which would be a de facto rate hike," said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities. The 10-year yield has repeatedly breached the BOJ's ceiling, only to close back at the 0.5% limit on each day.

☆ Bank of Japan keeps yield control policy unchanged
▼ + stars: | 2023-01-18 | by ( ) www.reuters.com time to read: +7 min

MARKET REACTION:The Japanese stock market cheered the BOJ's decision with the Nikkei share average (.N225) jumping more than 2% after the midday break. Therefore, among equities, we think Japanese financials sector will have a rerating of valuations over the next 3-6 months." That could escalate when the new governor of the bank will be announced and towards the policy meeting in March." MOH SIONG SIM, CURRENCY STRATEGIST, BANK OF SINGAPORE, SINGAPORE"The can has been kicked down the road and the attention will shift to the next meeting. CHARU CHANANA, MARKET STRATEGIST, SAXO MARKETS, SINGAPORE:"I think the speculations will still continue.

[1/2] A man walks at the headquarters of Bank of Japan in Tokyo, Japan, January 18, 2023. At a two-day policy meeting, the BOJ kept intact its yield curve control (YCC) targets, set at -0.1% for short-term interest rates and around 0% for the 10-year yield, by a unanimous vote. The central bank also made no change to its guidance that allows the 10-year bond yield to move 50 basis points either side of its 0% target. The decision to keep settings unchanged sent the dollar surging nearly 2% against the yen, its biggest one-day percentage jump since June 17. It also revised up the inflation forecast for fiscal 2024 to 1.8%, from 1.6% seen three months ago.

☆ Japan yields stay above policy cap as BOJ sticks to status quo
▼ + stars: | 2023-01-18 | by ( Kevin Buckland | ) www.reuters.com time to read: +2 min

TOKYO, Jan 18 (Reuters) - Japanese government bond yields remained above the central bank's 0.5% policy ceiling on Wednesday, after the Bank of Japan unanimously decided to keep its yield curve controls in place. The benchmark yield was up 1 basis point at 0.51% as of 0250 GMT. In a relatively volatile session for cash bonds, the yield had started out flat and then eased as much as 1.5 basis points at one point to 0.485%. The 10-year yield has repeatedly breached the BOJ's ceiling, only to close back at the 0.5% limit on each day. Ten-year JGB futures were in the midday break at the time of the policy decision.

☆ BoJ governor Kuroda's final meeting in March will be a 'very tough' one: Research institute
▼ + stars: | 2023-01-18 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailBoJ governor Kuroda's final meeting in March will be a 'very tough' one: Research instituteHiromi Yamaoka of the Future Institute of Research says it will be Bank of Japan Governor Haruhiko Kuroda's last opportunity to review and revise the current yield curve control framework.

☆ 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.

☆ Key moments in BOJ's monetary policy
▼ + stars: | 2023-01-18 | by ( ) www.reuters.com time to read: +3 min

1999February - BOJ introduces zero interest rate policy. 2000August - BOJ raises short-term target to 0.25%, a move criticised as premature as Japan suffers a domestic banking crisis. 2001March - BOJ adopts quantitative easing (QE), shifts policy target from interest rates to pace of money printing. 2016January - BOJ adds negative interest rate policy, and applies a 0.1% charge to a small pool of excess reserves financial institutions park with the central bank. July - BOJ eases monetary policy, ramps up ETF buyingSeptember - BOJ adopts yield curve control (YCC), shifts policy target to interest rates from pace of money printing and introduces 10-year bond yield target of around 0%.

☆ Bank of Japan has learnt danger of half-measures
▼ + stars: | 2023-01-18 | by ( Pete Sweeney | Thomson Reuters | Asia Economics Editor Pete Sweeney Joined Reuters Breakingviews In Hong Kong In September Previously He Served As Reuters' Chief Correspondent For China Economy | ) www.reuters.com time to read: +4 min

The Bank of Japan (BOJ) made no adjustments to its yield-curve control (YCC) policy that keeps interest rates ultra-low on Wednesday. However, that tweak’s failure to reduce the need of central bank intervention has left the BOJ with little appetite for more compromises. Instead Kuroda rolled out a new tool to hold interest rates down, signaling intervention will continue. CONTEXT NEWSThe Bank of Japan on Jan. 18 kept its ultra-low interest rates policy unchanged and maintained a bond yield cap band it has struggled to defend. Under the amended rules, the central bank can offer funds of up to 10 years against collateral to financial institutions for both fixed and variable-rate loans.

☆ Factbox: Key dates to watch out for on BOJ policy, leadership change
▼ + stars: | 2023-01-18 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

The Bank of Japan (BOJ) also awaits a leadership transition as Governor Haruhiko Kuroda's second five-year term ends in April. Below are key dates to watch:BOJ LEADERSHIP RACEPrime Minister Fumio Kishida will hand-pick nominees for the governor and deputy governor posts from a list crafted by his close aides and finance ministry officials. People seen as top candidates for the BOJ governor post include incumbent deputy governor Amamiya, as well as former deputy governors Hiroshi Nakaso and Hirohide Yamaguchi. The subsequent meeting will be held on April 27-28 under a new BOJ leadership. The new BOJ governor will also be busy with international meetings.

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.

☆ Pressure Rises on Bank of Japan for Further Policy Shift
▼ + stars: | 2023-01-17 | by ( Megumi Fujikawa | ) www.wsj.com time to read: 1 min

TOKYO—The Bank of Japan is under pressure to revise policy again at its meeting ending Wednesday after investors repeatedly attacked the central bank’s new 0.5% cap for the 10-year government bond yield. The battle between the BOJ and the markets has upended what are expected to be the final months of Gov. Haruhiko Kuroda ‘s decade in the job. He has devoted his term to keeping interest rates ultralow, a policy that many market players believe is likely to end this year with inflation in Japan nearing 4%.

☆ Japan's yield control faces biggest test to date as BOJ debates policy
▼ + stars: | 2023-01-17 | by ( Leika Kihara | ) www.reuters.com time to read: +5 min

But with inflation exceeding its 2% target, the BOJ is facing its biggest test so far for its stimulatory policy, which is called yield curve control (YCC). The cap for the 10-year bond therefore became 0.5%. Market expectations of an early rate hike have boosted yields broadly, with the eight-year moving higher than the 10-year yield. In considering the BOJ's options, some analysts bet it will further widen the band and allow the 10-year yield to rise as far as 0.75%. Others expect the central bank to raise the 10-year yield target above 0%, change it to one targeting a shorter-dated maturity, or abandon it altogether.

☆ Japan yields top BOJ cap for third day on eve of crucial policy decision
▼ + stars: | 2023-01-17 | by ( Kevin Buckland | ) www.reuters.com time to read: +2 min

The 10-year JGB yield rose 0.5 basis point to 0.505% as of 0820 GMT, although only one trade had been executed so far at 0136 GMT. "There is a strong cautiousness about taking fresh positions ahead of tomorrow," said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities. So far this month, the central bank has snapped up more than 17 trillion yen in debt, an unprecedented amount that calls into question the sustainability of the programme. The stakes are extremely high for Governor Haruhiko Kuroda and his colleagues, with speculators waiting to sniff out any hint that the central bank is headed for the exit door after decades of stimulus. "There's not much left for the BOJ to do except abandon the YCC framework," Muguruma said.

chartAnalysts at Citi are among the few who think the BOJ will abolish its YCC policy. Either way, the era of Japanese capital flowing into higher-yielding foreign bonds seem to be over, for now. Japanese investors were net sellers last year, and repatriation pressures and rising hedging costs suggest they won't be buyers this year. World markets were in wait-and-see mode on Tuesday and held to pretty narrow ranges, despite the torrent of news flow and data. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ 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.

☆ It's 'sayonara deflation' for Japan, strategist says
▼ + stars: | 2023-01-16 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailIt's 'sayonara deflation' for Japan, strategist saysJesper Koll, executive director at Monex Group, says Bank of Japan Governor Haruhiko Kuroda is "the man who beat Japan's deflation."

☆ Yen tests seven-month high ahead of BOJ policy decision; dollar wobbles
▼ + stars: | 2023-01-16 | by ( Rae Wee | ) www.reuters.com time to read: +2 min

SINGAPORE, Jan 16 (Reuters) - The Japanese yen held near an over seven-month peak on Monday, as traders, in the lead up to the Bank of Japan's monetary policy decision this week, ramped up bets that the central bank could make further tweaks to its yield control policy. The yen was last 0.1% lower at 128.01 per dollar, having surged to 127.46 per dollar on Friday, its highest since May last year. Markets have been pressing for the BOJ to shift away from its ultra-easy monetary policy, which on Friday caused the yield on Japan's benchmark 10-year government bonds to breach the central bank's new ceiling. With the BOJ due to announce its monetary policy decision on Wednesday, expectations are for further tweaks to its yield control policy or a full abandonment of it. Against a basket of currencies, the U.S. dollar index fell 0.13% to 102.13, languishing near Friday's seven-month low of 101.97.

☆ Kuroda to attend Davos, depart shortly after closely-watched BOJ meeting
▼ + stars: | 2023-01-16 | by ( ) www.reuters.com time to read: 1 min

TOKYO, Jan 16 (Reuters) - Bank of Japan (BOJ) Governor Haruhiko Kuroda will travel to Davos and attend a panel at the annual World Economic Forum meeting on Friday, the central bank said on Monday. Kuroda will depart on Wednesday, when the BOJ concludes its two-day policy meeting that begins on Tuesday, and return to Japan on Sunday, the BOJ said in a statement. He will attend an hour-long session discussing the global economic outlook at 11 a.m. Friday local time, it said. Markets are rife with speculation the BOJ could tweak its yield curve control (YCC) policy at this week's policy meeting, as rising inflation and prospects of higher wages put upward pressure on long-term interest rates. Reporting by Leika Kihara; Editing by Toby ChopraOur Standards: The Thomson Reuters Trust Principles.

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