BREAKING - Bank of Japan raises rates to policy range of 0% to 0.1%, the first such rate hike in over a decade 💹 and scraps yield curve control.
The central bank will also stop buying ETFs and phase out buying of corporate debt. 2 key points: 1) That was completely in line with my preview 2) The tone was dovish as the boJ will continue JGB purchases at approximately the same amount as before. It pledged to gradually reduce its purchases of commercial paper and corporate bonds, with the aim of stopping this practice in about a year. Market reaction >>> The Japanese yen weakened to as much as 149.92 against the greenback, while the Nikkei stock index swung between gains and losses following the BOJ decision. Yields on the 10-year and 30-year JGBs dipped. Source: Bloomberg
Japan’s $4 Trillion offshore funds will ignore first BOJ Hike - stocks and bonds in the US insulated from impact, survey shows
Japanese money is poised to stay offshore as the central bank creeps toward tighter policy, according to the latest Bloomberg Markets Live Pulse survey. Only about 40% of 273 respondents said the first interest-rate hike by the Bank of Japan since 2007 will prompt the nation’s investors to sell foreign assets and repatriate the proceeds back home. That’s good news for US stocks and bonds. Source: Bloomberg
Bank of Japan is expected to end its negative interest rates this week
Marking 1st rate hike since February 2007 in a turning point for hashtag#BoJ's long-running monetary easing pol. A lot' has changed globally since last ³BoJ hike 17 years ago. SRP has a great overview... (through HolgerZ)
Nikkei reported BOJ conducted a gensaki (reverse repo with JGB collateral) operation Monday for the first time in about a month.
*Article cited broad upward pressures on rates amid heightening expectations of an imminent BOJ rate hike, leading traders to conclude the measure was meant to prepare for market reactions Source: C.Barraud https://lnkd.in/e8c8ubcx
Japanese companies boost wages in departure from 'lost decades'
Japan's largest employers announced record pay increases on Wednesday. Every spring, unions and management hold talks, known as shunto, to set monthly wages ahead of the start of Japan's fiscal year in April. Toyota Motor, Hitachi and Panasonic Holdings were among the companies that on Wednesday fully met labor unions' demands to raise wages. Nippon Steel's response exceeded the union's demands, raising monthly wages by a record 35,000 yen ($237), or 14%. Toyota did not disclose details of its wage increases but said it fully met union demands. The Toyota Motor Workers' Union has demanded a record bonus payment worth 7.6 months of salary, citing the company's all-time high annual operating profit forecast of 4.5 trillion yen for the current fiscal year. The union has also proposed specific demands for each job category, up to a 28,440 yen monthly wage increase. Hitachi and Toshiba said their pay hikes are the largest since the current negotiation style was introduced in 1998. According to the Japan Council of Metalworkers' Unions (JCM), an alliance of unions in the manufacturing industry, 87.5% of member organizations had their demands either fully met or exceeded. source : nikkeiasia
International allocation Japan vs China
Source: BofA, The Daily Shot, Win Smart
Bank of Japan boj now owns nearly 60% of the entire Japanese government bonds
Source: Game of Trades
Japan | Yen Gains With Bank Stocks as Wages, BOJ Remarks Boost Hike Bets – Bloomberg
The yen climbed to a one-month high and Japanese bank shares rose after wage data and a Bank of Japan board member’s remarks bolstered speculation the authority will raise interest rates this month. Japanese government bonds extended their drop as data from an auction of 30-year debt indicated weak investor demand for long-maturity securities ahead of the expected BOJ shift. Policy-sensitive two-year notes also fell, with their yield climbing to 0.195%, the highest level since 2011.
