Japan Unveils Extensively Priced In "Open-Yended" Monetization News

Tyler Durden's picture

In the most anticipated (and likely most strawman/leaked) policy actions, the BoJ and the Japanese government (still independent entities theoretically) have unveiled the new monetary policy to complement the $116bn fiscal stimulus plan to boost growth:

  • *BOJ TO ADOPT 2% INFLATION TARGET
  • *BOJ WILL INTRODUCE OPEN-ENDED PURCHASING FROM JAN 2014
  • *BOJ TO BUY 2T YEN OF JGBS MONTHLY FROM JAN 2014
  • *BOJ TO BUY ABOUT 10T YEN OF T-BILLS MONTHLY FROM JAN 2014

With epic amounts of JPY shorts and NKY longs, JPY was notably bid versus the USD (from Friday's close) going in, 30Y JGBs bid relative to 10s, and the NKY and TOPIX were leaking lower. Now is the time to see just how effective this efficient market is at pricing in the stabilization-to-retaliation phase of the current actions. Though of course, there is no intent to cough-'weaken'-cough the JPY:

  • *AMARI TO SAY AT DAVOS NO POLITICAL INTENTION TO MANIPULATE YEN

So, as expected, the BoJ joins the Fed and ECB on the unlimited "open-yended"(TM) printfest bandwagon. So far JPY is not totally impressed.

 From our reading there is no change until Jan 2014 at which point the BOJ will monetize about 13 trillion in JGBs split between 2 trillion in BIlls and 10 trillion in bonds - perhaps giving cover for Aso's G-20 comments? or just as with the ECB, the mere threat of 'unlimited' easing is thought to be enough. Or, simpler, the BOJ wants its cake - lower JPY - and to eat its low bonds too...

But importantly from a flow standpoint nothing has changed, and nothing will change for the next 12 months. How Japan will get the sustainable cash inflow to push inflation to 2% in the interim is anyone's guess...


 

and close-up - 40 minutes to bring it all back...

 

On the fiscal side:

  • *ASO SAYS NEXT FISCAL YEAR'S BUDGET WILL BE TIGHTER
  • *ASO WANTS TAX INCOME TO EXCEED NEW BOND ISSUANCE IN FY13 BUDGET
  • *ASO SAYS GOVT, NOT BOJ SHOULD BE RESPONSIBLE FOR EMPLOYMENT

On the monetary side:

 

So between now and January 1, 2014.... nothing??

Full statement to follow (pdfs here and here)

BoJ1 by

BoJ2 by