DIRS.INFO The most relevant business & tech news

☆ 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.

☆ 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.

Japanese investors hold a lot of foreign bonds - some $4.3 trillion in various debt instruments, of which $2.085 trillion is "portfolio investments." Around half of that is in U.S. assets such as Treasuries, agency debt and corporate bonds, and around a third in euro zone securities. Wholesale liquidation of Japanese investors' foreign bond holdings is unlikely barring a "very substantial" rise in Japanese yields from here. chartLast year, Japanese investor selling picked up pace as U.S. and euro zone borrowing costs rose. Hedged investors have cut back their exposure to foreign bonds, particularly banks and now life insurers, according to Setser and Etra.

☆ BOJ policy meeting: Japan decides to maintain ultra-easy policy, leaves yield curve control targets unchanged
▼ + stars: | 2023-01-17 | by ( Laura He | ) edition.cnn.com time to read: +1 min

Hong Kong CNN —The yen plunged on Wednesday after the Bank of Japan decided to maintain its ultra-easy monetary policy, defying market expectations that rising inflation could force the central bank to move away from low interest rates. The BOJ kept its yield curve control (YCC) targets unchanged as it concluded a two-day policy meeting on Wednesday. It left the short-term interest rate at an ultra-dovish minus 0.1% and the 10-year Japanese Government Bonds (JGB) yield around 0%. The YCC policy is a pillar of the central bank’s effort to keep interest rates low and stimulate the economy. The unexpectedly hawkish decision caused stocks to tumble, while sending the yen and bond yields soaring.

☆ Morning Bid: Let it go
▼ + stars: | 2023-01-16 | by ( ) www.reuters.com time to read: +2 min

A look at the day ahead in European and global markets from Anshuman DagaThe land of rising yields is the No. 1 focus of investors on Monday, as Japan's central bank may again let its bond-market peg go higher. Global inflation data due this week could underscore investors' expectations that the worst of the global price squeeze is over. A final read of euro zone inflation for December, as well as readings from Britain, Canada and Japan are due. Core inflation in all four regions is mostly rising and above target but the worst may have passed.

☆ Explainer: How does Japan's yield curve control work?
▼ + stars: | 2023-01-16 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

TOKYO, Jan 16 (Reuters) - The Bank of Japan's yield curve control (YCC) is under fierce market attack, as investors test the bank's commitment to capping bond yields with inflation above the BOJ's target. When the central bank had gobbled up half the bond market, it was hard to commit to buying at a set pace. YCC allowed the BOJ to buy only as much as needed to achieve its 0% yield target. The bank has tapered bond buying in times of market calm to lay the groundwork for an eventual end to ultra-easy policy. But markets may force the BOJ to relent, breaching the 10-year yield cap on Friday - before massive BOJ bond buying brought the rate back down.

☆ Analysis: Bank of Japan's yield curve control in danger as policy backfires
▼ + stars: | 2023-01-16 | by ( Leika Kihara | ) www.reuters.com time to read: +6 min

In a sign of its resolve to defend the yield cap, the BOJ on Monday announced plans to conduct additional, emergency bond-buying. To be sure, with global commodity prices falling, private analysts agree with Kuroda that inflation will slow back toward the BOJ's target later this year. It's better to remove the 10-year yield target, but overhauling YCC would raise questions of accountability." Data on Friday will likely show Japan's core consumer prices rose 4.0% in December, double the BOJ's target and a fresh 41-year high, a Reuters poll showed. "If markets continue to ask more from the BOJ, YCC may not last that long."

☆ Factbox: BOJ's possible next step as market attacks yield policy
▼ + stars: | 2023-01-16 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

STAND PATThe BOJ's decision last month to widen the band around its 10-year yield target has failed to remove market distortions caused by its huge bond buying, instead prompting the market to test the 0.5% upside of the range. MORE TWEAKSBond sellers broke the BOJ's 0.5% cap on Friday, less than a month after the policy tweak, forcing emergency buying from the central bank to bring the yield back down. Or it could widen the band around its 10-year yield target. ABANDON, RAISE YIELD TARGETThere is a slim chance the BOJ could raise the 10-year yield target or abandon YCC altogether. Any such move would likely be accompanied by, or come well after, the end of the 10-year yield target.

☆ Explainer: What is happening in Japan's bond market?
▼ + stars: | 2023-01-16 | by ( Junko Fujita | ) www.reuters.com time to read: +4 min

TOKYO, Jan 16 (Reuters) - Market forces have pushed Japanese government bond yields above policy targets. Here is what is happening and what it means:WHAT IS JAPAN'S BOND MARKET? To stimulate lending, growth and inflation, the Bank of Japan has pinned short-term interest rates at -0.1% and 10-year yields around zero since 2016. That swap yield may indicate where the 10-year bond could be if the BOJ left the market alone. "Unless the BOJ reduces its presence in the market and changes its stance that it is controlling the yield level, market liquidity won't improve."

☆ Asian shares cautious, BOJ faces crunch policy decision
▼ + stars: | 2023-01-16 | by ( Wayne Cole | ) www.reuters.com time to read: +5 min

Earnings season gathers steam this week with Goldman Sachs, Morgan Stanley and the first big tech name, Netflix, among those reporting. However, it did try to get ahead of speculative sellers by announcing it would do another emergency round today, suggesting it was determined to defend its yield policy at least for now. THE YEN UN-ANCHOREDThe BOJ's uber-easy policy has acted as a sort of anchor for yields globally, while dragging down on the yen. Were it to abandon the policy, it would put upward pressure on yields across developed markets and likely see the yen surge. "A soft-landing also reduces the tail risk of much higher U.S. rates, and this reduced risk premia helps global risk appetite."

☆ 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.

☆ 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.

Trading volume across the region may be lighter than usual on Monday because U.S. markets are closed for Martin Luther King Day. While the BOJ is expected to leave its central 'yield curve control' targets at -0.10% for short-term rates and 0% for the 10-year bond yield, all eyes will be on whether policymakers make further adjustments to yield-curve control (YCC) bands following December's surprise tweak. The BOJ may also raise its inflation forecasts on Wednesday, ahead of December inflation data on Friday. Later in the week, Bank Indonesia is expected to raise interest rates by another 25 basis points to 5.75%. Bank Negara Malaysia is expected to raise rates by a quarter point on Thursday, to 3.00%.

TOKYO, Jan 13 (Reuters) - Yields on Japan's benchmark 10-year government bonds breached the central bank's new ceiling on Friday in the market's most direct challenge yet to decades of uber-easy monetary policy. The central bank already holds 80% to 90% of some bond lines. REMEMBER THE RBAThere is talk in the markets that the central bank could shorten its yield target to three- and five-year bonds, but history abroad suggests the strain will remain. With the local economy recovering faster than expected and inflation accelerating, the RBA realised its pledge to keep three-year yields at 0.1% out to 2024 was no longer credible. So it abruptly dropped the whole thing and three-year yields spiked to 0.48%, an episode the RBA itself conceded caused "reputational damage" that would not be repeated.

☆ Morning Bid: RIP YCC?
▼ + stars: | 2023-01-12 | by ( Wayne Cole | ) www.reuters.com time to read: +3 min

SYDNEY, Jan 12 (Reuters) - A look at the day ahead in European and global markets from Wayne Cole. This, presumably, refers to the fact that 10-year yields have been stuck at the new YCC ceiling of 0.5% for four sessions, even while the BOJ has been busy buying bonds in bulk to get them down. Then again, the market had thought the same last month when the central bank wrongfooted everyone by widening its YCC band. Whatever the decision, time is ticking for YCC and maybe even negative rates in Japan. As for U.S. CPI, the market is clearly priced for a dovish outcome, so there's some risk of disappointment.

☆ Academic close to Japan's Kuroda says BOJ moving towards policy normalisation
▼ + stars: | 2022-12-28 | by ( ) www.reuters.com time to read: +2 min

Kuroda said then that the move was not a prelude to an exit from ultra-loose policy, because recent price rises meant Japan's inflation-adjusted, real interest rate had been declining. Japan's annual consumer inflation rate hit 2.8% in November even when excluding the effect of higher energy and food prices. "That would be an ideal initial condition for the BOJ to start hitting its inflation target on a more sustainable basis," Ito said. Ito and Kuroda, who have been close since working together at Japan's finance ministry in 1999-2001, lobbied hard for the BOJ to adopt a 2% inflation target to end deflation. The BOJ did so in early 2013 and deployed a massive stimulus programme when Kuroda became governor months later.

☆ BOJ Kuroda dismisses near-term chance of exiting easy policy
▼ + stars: | 2022-12-26 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

Kuroda said the BOJ's decision last week to widen the allowance band around its yield target was aimed at enhancing the effect of its ultra-easy policy, rather than a first step toward withdrawing its massive stimulus programme. "Labour market conditions in Japan are projected to tighten further, and firms' price- and wage-setting behaviour is also likely to change," Kuroda said. The BOJ shocked markets last week with a surprise widening of the band around its 10-year yield target. The outcome of next year's spring wage negotiations between big companies and unions will also be key to the outlook for wage growth, he said. Speaking at the same meeting, Prime Minister Fumio Kishida called for business leaders' help in achieving wage growth high enough to compensate households for the rising cost of living.

☆ Japan’s Yield Curve Control Is a Tool Worth Keeping
▼ + stars: | 2022-12-22 | by ( Jon Sindreu | ) www.wsj.com time to read: 1 min

Like a heavy power drill, the Bank of Japan’s policy of capping bond yields seems to be difficult to use without cracking the wall. Unlike many of the tools tested by central banks since 2008, though, it may be worth keeping in the box. Haruhiko Kuroda has so far stood apart from other central bankers in refusing to unwind extra-loose monetary policy. Under his “yield curve control,” or YCC, the 10-year Japanese government-debt yield remains pegged at 0%. Yields have since jumped close to the new ceiling.

☆ Analysis: Kuroda's abrupt policy tweak opens door for bigger shift next year
▼ + stars: | 2022-12-21 | by ( Leika Kihara | ) www.reuters.com time to read: +6 min

Waiting until next year would have forced the BOJ to combat intensifying market speculation of a near-term policy shift, or act when a deep U.S. recession could hit Japan's economy, they say. "When uncertainty is so high over the outlook for U.S. monetary policy, it probably wants to have a free hand on when next to act." POLITICS KEY TRIGGERThe abrupt timing of Tuesday's move also reflects growing political pressure for the BOJ to shift away from a policy narrowly focused on its 2% inflation target, the sources say. Hours before he met Kishida, Kuroda explained in parliament a framework on how the BOJ could exit ultra-easy policy in the future. Another dovish board member, Asahi Noguchi, also said earlier this month it "won't be surprising" for the BOJ to shift monetary policy.

☆ Analysis: Bank of Japan gives an inch, investors ready to claim a mile
▼ + stars: | 2022-12-21 | by ( Tom Westbrook | ) www.reuters.com time to read: +5 min

But rather than providing breathing room, investors say it is likely to encourage more of the sort of pressure that has bent the bond market out of shape. "Fifty basis points becomes the new 25 basis points. When trading resumed in Japan, 10-year JGB yields shot towards their new ceiling and futures fell so fast it triggered a circuit breaker suspending trade. By the end of the session, 10-year bond yields sat 14.5 basis points higher at 0.395%, the sharpest one-day rise for Japanese 10-year yields in more than 14 years. Mandatory credit Kyodo/via REUTERSThose swaps - another market measure of interest rate expectations - tracked bond yields until early this year.

As the Federal Reserve, European Central Bank, Bank of England and other Western central banks to varying degrees drained the liquidity punchbowl this year by raising rates and initiating quantitative tightening, the BOJ was on the other side with People's Bank of China filling it back up again. Liquidity support for world markets next year was always going to dwindle, but few would have had a possible BOJ halt to asset purchases on their bingo card so soon. ROCKY ROAD AHEADThis year has been one of the worst ever for world markets, hammered by multi-decade high inflation and interest rates across much of the developed world, and a rampant dollar. "The largest expansion of central bank balance sheets in history will give way to the largest contraction in history," they said. The ECB last week laid out plans to stop replacing maturing bonds from its 5 trillion euro ($5.31 trillion) portfolio.

☆ 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.

Search resuls for: "YCC"

25 mentions found