Bank of Japan

How Much Longer Will Investors Trust The Central Banks?

It is time for central banks to start acknowledging their limitations, and doing so by acting and not talking about their future intentions. It is also time for investors to stop believing that central banks had the answers to begin with.

Traveling Circus

After Wednesday’s policy statements by the Fed and Bank of Japan, a harsh light is being shined on the incredible nature of their communications. It would be wise in the current environment to structure investment portfolios with a pro-volatility bias.

Like Everything Else, History Repeats (Almost Exactly) Because Power Truly Corrupts

The FOMC has no idea what it is doing, just like Bank of Japan officials about a decade before them. Rather than learn from all the experimentation, the power and prestige still, somehow, afforded to all of them is just too much to give up. They would clearly rather keep themselves on top of the political power structure as it relates to the economy than to admit what is increasingly obvious (a second time).

Global Central Bank-Driven Stock Rally Fizzles; Crude Rebounds On Saudi Oil Production Cut Report

Until minutes ago, this week's rebound in global equities appeared to be running out of steam as oil retreated from a two-week high and a dollar slide ended.  However, as noted just around 6am, Reuters reported, citing as it usually does various "anonymous sources", that in a radical departure from its long-held policy of not cutting production, Saudi Arabia was prepared to cut production on condition that Iran freezes output, which led to an instant spike in crude.

Bill Blain: What The BOJ Just Did Is "Recipe For Disaster"

"I rather suspect the horrible truth will soon be out. The last 7 years of extreme monetary experimentation has created a mutant economy... where the only beneficiaries have been holders of financial assets. Investors have been loath to invest in real plant, infrastructure or jobs because the returns look so limited by artificially low rates."

FX & Bond Markets Ain't Buying What The Bank Of Japan Is Selling

Equity markets are stronger on the back of financials  - helped by BoJ's plan to steepen the Japanese bond curve - but judging by the strengthening in the Yen, FX markets are non-believers. The lack of additional easing is largely being heralded as a disappointment (no lower NIRP and no increased buying) and many are questioning the kneejerk bounce in stocks (as bank balance sheets face trauma from the 'reverse twist' effect on the long bonds).

"Disappointing And Underwhelming" - An Unhappy Wall Street Reacts To The BOJ's Latest Announcement

Just after midnight east coast time, the BOJ presented its new and improved monetary policy dubbed “QQE with Yield Curve Control,” in which the central bank said it would buy JGBs such that 10-year yield remain at the current level of around zero percent. The BOJ will also buy JGBs at designated yields, and generally steepen the curve even as it failed to lower rates or add more QE. Wall Street took one look at what the BOJ came up with... and hated it immediately.

Bank Of Japan Maintains Bond-Buying Pace With "Yield Curve Control", Leaves Rates Unchanged, But Offers Hope For Moar

The BOJ disappointed by unveiling a lackluster package that sent stocks lower and JPY higher initially - bigger ETF buying, maintains rates (no easing), maintains bond-buying (no easing), unveils "yield curve control" (steepens curve but crushes bank balance sheets through long bond MTM losses). But then offered some hope by noting that the monetary base may fluctuate to achieve yield-curve control (which markets liked as it implies the possibility of more easing).

BOJ Needs To Go All The Way

The BOJ does have a track record of surprising markets. If it doesn’t want to see USD/JPY collapse, exacerbating the nation’s economic struggles, then it needs to ensure the shock is a dovish one this time. Which maybe what the banks are negatively expecting...Even as Goldman warns "don't expect much if anything, at all."

US Futures, Bonds Rise, Dollar Dips As Fed, BOJ Meetings Begin

If yesterday one could "explain" the overnight stock levitation due to the move higher in crude oil, today there is no such catalyst with WTI down modestly, and yet the broader push higher across European stocks and US equities has reappeared following yesterday's muted close on Wall Street ahead of key central bank data on deck.

Frontrunning: September 19

  • Global Stocks Rise, Buoyed by Commodities (WSJ)
  • For Yellen, a September Fed surprise could close confidence gap (Reuters)
  • Robot detonates New Jersey device in latest bomb discovery (Reuters)
  • Syria Truce Hangs in Balance Amid Attacks, Lack of Aid (WSJ)
  • Merkel’s Party Suffers Worst Berlin Loss of Postwar Era (BBG)
  • China’s Home Prices Rise Most in Six Years as Sales Gain (BBG)