The BoJ policy adjustments, while relatively subtle at this time, have afforded it more flexibility and sustainability that should help boost confidence and address key concerns that it had run out of scope to adjust policy and may be forced to reduce policy accommodation. It helps restore confidence that the BoJ can sustain and enhance […]
While waiting for this week’s big central bank policy meetings, BoJ and FOMC later today, we look at the set-up for the RBNZ policy meeting that follows on Thursday and recent trends in Australia. Commodity price support has increased for both. Recent New Zealand economic reports have been better than expected, suggesting the economy is […]
A longer term yield rebound has driven the USD higher in recent weeks, with less focus on short-term rates. The rise in yields reflects a reversal from irrationally low levels and perverse strength in currencies with NIRP. The BoJ has been forced to reassess its policy approach that was no longer working. It does not […]
US economic data has continued to disappoint most noticeably with weak retail sales extending from July into August. This has undermined the USD, although overall FX markets appear in extended choppy directionless patterns. The chance of a Fed rate hike next week has diminished to negligible levels. Judging by recent comments by most FOMC members, […]
The BoJ appears to be massaging market expectations towards expecting a policy announcement on 21 September designed to lower short-term yields and raise long-term yields in Japan (‘operation reverse twist’). This could be achieved by lowering the NIRP and adjusting the JGB purchase program to buy less long-term bonds. Recent speeches by BoJ Governor Kuroda […]
After reaching record lows in July and a period of stable trading in August, global government bond yields have broken above their recent range and may be on the cusp of a larger correction. There has not been a significant change in the outlook for global growth or inflation. In fact, recent inflation indicators have […]
Policy inertia at the major central banks may be contributing to a low degree of commitment in FX and rates markets leaving them subject to flights of fancy of short-term speculators. The greatest uncertainty appears to relate to Japanese financial markets and intentions of Japanese policymakers. While there has been much discussion in the market […]
USA rate hikes are again slipping out of view. The ISM reports and broad labor market indicators suggest that economic momentum is slipping below potential. A hike in September would appear to be a rash mistake and the risk is swinging towards no hike this year. But just as the USA economy may be stalling, […]
The speech by BoJ Governor Kuroda indicated that the Bank will stick to a 2% inflation objective and aim to achieve it at the “earliest possible time”. And also assured us that the “level” of monetary policy accommodation will not be reduced. However, the speech suggested that the Bank would consider changing the mix of […]
The USA ISM manufacturing survey was surprisingly weak, confirming the trend apparent in regional surveys recently. The data should cause some pause in the debate edging towards a rate hike in the USA. The global PMI fell back somewhat suggesting a stalling in its recent improvement. It remains weak in the low 50s. China’s PMI […]