BoJ Disappoints! Nikkei Drops 500 Points From Earlier Highs

Tyler Durden's picture

UPDATE: Nikkei futures now -500 from US day-session highs

In what must be quite a surprise to Goldman (as we discussed here), the BoJ has decided not to give in to the market's demands:

  • *BOJ REFRAINS FROM EXPANDING J-REIT, ETF PURCHASES (expected lifting of cap)
  • *BOJ LEAVES FUNDING TERMS UNCHANGED AFTER JGB YIELD VOLATILITY (expected extension from 1Y to 2Y)

The market's angry reaction... NKY -300 from US day-session highs, USDJPY gapped down 80 pips to 98.00, JGB Futs closed, JGBs unch. Full statement to follow:

 

 

which means:

 

 

 

Full statement:

Statement on Monetary Policy

1. At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided, by a unanimous vote, to set the following guideline for money market operations for the intermeeting period:

 

The Bank of Japan will conduct money market operations so that the monetary base will increase at an annual pace of about 60-70 trillion yen.

 

2. With regard to the asset purchases, the Bank will continue with the following guidelines:

 

The Bank will purchase Japanese government bonds (JGBs) so that their amount outstanding will increase at an annual pace of about 50 trillion yen, and the average remaining maturity of the Bank's JGB purchases will be about seven years.

 

The Bank will purchase exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs) so that their amounts outstanding will increase at an annual pace of about 1 trillion yen and about 30 billion yen respectively.

 

As for CP and corporate bonds, the Bank will continue with those asset purchases until their amounts outstanding reach 2.2 trillion yen and 3.2 trillion yen respectively by end-2013; thereafter, it will maintain those amounts outstanding.

 

3. Japan's economy has been picking up. As for overseas economies, while the manufacturing sector continues to show a lackluster performance, they are gradually heading toward a pick-up as a whole. In this situation, exports have started picking up. Business fixed investment continues to show resilience in nonmanufacturing and appears to have stopped weakening on the whole. Public investment has continued to increase, and housing investment has generally been picking up. Private consumption has remained resilient, assisted by the improvement in consumer sentiment. Reflecting these developments in demand both at home and abroad, industrial production has been picking up. Meanwhile, financial conditions are accommodative. On the price front, the year-on-year rate of change in the consumer price index (CPI, all items less fresh food) has been negative, due to the reversal of the previous year's movements in energy-related and durable consumer goods. Some indicators suggest a rise in inflation expectations.

 

4. With regard to the outlook, Japan's economy is expected to return to a moderate recovery path, mainly against the background that domestic demand increases its resilience due to the effects of monetary easing as well as various economic measures, and that growth rates of overseas economies gradually pick up, albeit moderately. The year-on-year rate of change in the CPI is likely to gradually turn positive.

 

5. Regarding risks, there remains a high degree of uncertainty concerning Japan's economy, including the prospects for the European debt problem and the growth momentum of the U.S. economy as well as the emerging and commodity-exporting economies.

 

6. The Bank will continue with quantitative and qualitative monetary easing, aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will examine both upside and downside risks to economic activity and prices, and make adjustments as appropriate.

 

Such conduct of monetary policy will support the positive movements in economic activity and financial markets, contribute to a rise in inflation expectations, and lead Japan's economy to overcome the deflation that has lasted for nearly 15 years.

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Dr. Engali's picture

Watch out for that first step, it's a doozy.

Groundhog Day's picture

Abe!  Abe! I thought that was you

Monedas's picture

I'll bet you're one of those guys who doesn't  have any PM insurance .... at all .... am I right .... am I right ?  Bingo !!!

Number 156's picture

Tuesday will be fun here in the west.

Groundhog Day's picture

could it be?  2 tuesday's down in a row

mayhem_korner's picture

 

 

Maybe, maybe not.  Remember the Mr. Scott-warp-speed ramp/stick save last week when the USDJPY broke 97?  If Au starts hovering around the 1414 level again, you can bet Uncle Ben will give his "blue horseshoe loves SPY" order.

Urban Redneck's picture

Have the bears emerged from hibernation?  

It feels suicidally lonely hedging a portfolio with shorts in the face of a firing squad of FED printing presses (esp on a Tuesday).

SillySalesmanQuestion's picture

Those extra printers and ink must have been backordered and not shipped on time...damm.

ReactionToClosedMinds's picture

Query:  Are Angela Merkel & Draghi happy or sad - or they care (i.e., they have heavier concerns>>>)?

Is "Japan" pissed at Team 44 maybe (for how many reasons ..... see Erdogan, or any other leader eslewhere for that matter excepting Putin who came back from 'retirement' at Team 44's installation) ?  Just askin'

 

Confundido's picture

Oh well, next time they will give in...

asteroids's picture

"Japan's economy is expected to return to a moderate recovery path". After a few decades of trying and their population rapidly aging, it's not going to happen.....

rubearish10's picture

We hang on the words of Bankster mouthpieces! What a disgrace to the notion of price discovery!

ultimate warrior's picture

This just means the BOJ needs to print MOAR! 

The game of printing has just begun. Governments around the world want inflation....well they are about to get all they can fucking handle.

Economic Outlook

Bullish: wheelbarrows, cheap whiskey, easy women, encrypted computer/cell phones

Bearish: freedom, liberty, rights, prosperity, an honest government 

Hongcha's picture

Indeed rube ... the whole thing is so collaterally rigged, I barely even pause to think of it.  One day we will wake up and U.S. stock futures will be down 5% ... I want to be short that day ...

rubearish10's picture

There's been so much anticipation, that day will not come when expected. When you say "one day" it really could be any day. This means be prepared to the extent you could afford to be, since all rising boats will capsize with limited life preservers. The premium for a lifesaver is well worth it if you choose to be involved in the first place! Good luck!

otto skorzeny's picture

Everything is wound so tight it will happen in the blink of a HFT's eye.

alphamentalist's picture

I think you mean rife pleservers.

FreeNewEnergy's picture

I went short - via August DIA puts - yesterday. I don't play much anymore, being the market is so rigged, but I go exclusively short about twice a year. Worked last fall (Nov DIA puts) and a nice 100-point dip on the Dow would be a good start for me.

Just from a purely technical, chartist position, I think we may be entering a bear market. The bull has been in charge since March 2009, and is now 52 months old. Nothing lasts forever, even $85 billion-a-month-liquidity-driven Ponzi schemes.

I need the money to buy moar PMs and begin my campaign to root out and fire 90% of the nation's spies. Really, do we need 1.4 million people with Top Secret security? Besides, "Top Secret" isn't very secret when nearly a million and a half people have access.

Wish me luck. Go, Abe!

Yen Cross's picture

     I read that Dennis Gartman did a reco, long aud/jpy earlier @ 93.60 area. I looked at the hourly chart on usd/jpy and lmfao. How's that a/j long trade working out for you now Dennis? BTFD

disabledvet's picture

how's that end of the yen trade looking as well? hmmm. "going down swinging" as they say. better watch those economic growth numbers next time Yen Cross...there's are in the 4% range...not ours. we've got a "lot of cleaning up to do" and it would appear it's not going to happen anytime soon. Canada just posted big jobs numbers too...something that make the current regime look totally Out There still. Ironically our asset prices are still inflating..save for labor and "certain debt products" now...for how much longer though. hmmmm. "that's not dollar positive" should that reverse.

Yen Cross's picture

     What? I'm short aud/jpy and usd/jpy.

Bohm Squad's picture

lol...I was long the USDJPY and got stopped out...what I get for catching a falling knife.  Think of me when you spend my 56 pips, Yen Cross.  

Frank N. Beans's picture

nikkei.com shows down 1 point, what's up wit dat

Yen Cross's picture

 

Japan 225 13,284.50 13,514.20 13,584.00 13,154.50[ -229.70 -1.70%] 3:29:01
Bunga Bunga's picture

How do you say 'moar' in Japanese?

adr's picture

I like how yesterday the better economic news from Japan weakened the currency. Of course it wasn't really better, but the headlines made it look that way.

New normal assbackwards. Confirm the lowest wholesale gasoline sales in decades, rbob and crude soar.

Better economic news, currency weakens because the free money punchbowl might be taken away.

The new 2013 meme, "don't take my easing, bro!"

Freedumb's picture

Yesterday really put a damper on my joy at the Nikkei dying. But looks as if all is well in the shire again so far in this afternoon session.

disabledvet's picture

Where's Yen Cross these days? hmmm. "this feels like the 70's" only instead of inflation we have deflation this time. my personal view is that these Japanese yields must be held "at or near zero" to the end because of the dire condition of the State because of Fukumshima. 'tis only rational. It is interesting to view Europe as somehow different of course (they seem to welcome deflation). The USA is definitely different because we have a war going on...a "global war on terror" as it were...and this puts a bid in...well, it would appear just about every asset class there is. http://www.youtube.com/watch?v=FOV8xLGnUks

Zgangsta's picture

The Nikkei has not dropped anywhere near 500 points! (yet)

GOLD AND SILVER NATZI's picture

Yeah, I don't see the 500 point drop either.  Of course, I don't see a lot of things......

Bernankenstein's picture

The Nikkei futures indeed dropped almost that much (500 pts.) from the day's highs. 

Zgangsta's picture

The misleading headline says nothing about futures.

Non Passaran's picture

Screw you, read the content and not just the headlines.
How is your lack of attention for detail our problem?

Zgangsta's picture

It's not the lack of attention to detail, it's the lack of any substance.

So futures moved big.  The Nikkei didn't.  You think Ms. Watanabe cares a Gucci shoe about any of that?

Meaningless melodramatic tripe.  Move along.

nomorebuyins's picture

The Nikkei is open and trading, down around 100 now.

TruthInSunshine's picture

Japan is imploding  before all of our eyes, in real time.  The information releases and other official statements by those who command the public consumption channels in Japan reminds me of the utter incompetence and easily detected lying propagated by the Japanese Government and TEPCO in the wake of the Fukushima Daiichi disaster.

It's no longer a case of whether Japan will implode, but merely how long before its economy and Modern Money Mechanics monetary system takes the big dirt nap.

It will be the first to do so in a long and storied list.

Freedumb's picture

I'm sure we all agree on the end result for all of this, but the audacity of what central banks are doing today is unbelievable. My biggest nightmare right now is a vision of this continuing onward on a global scale for years, the same way Japan has maintained their Keynesian policies and thus engineered themselves stagnation on a domestic scale for decades. That's why more than anything I hope for a major Keynesian policy failure so obvious and severe that no one can deny it, ideally forcing this farce to end. But then the nightmare progresses further -- obviousness isn't even enough in this environment to change people's behaviour.

TruthInSunshine's picture

Despite all those who will reflexively reply with the sloganeering of "they'll keep it propped up indefinitely," things such as basic arithmetic and the immutable laws of physics (e.g. gravity) can now be cited as a firm and complete rebuttal to this mindless cheerleading.

Central banks and purported "sovereign governments" have now come, one by one, to the fork in the road (the one they feared most), and despite Yogi Berra's sage wisdom, they can't just "take it."

Non Passaran's picture

The word is not indefinitively, but for a while.
Say, a year, 5 or 10.
How many ZH-ers gave the fiat system 5 more years in 2008?
And here we are with the roaring markets, fucked up PM charts and crashed PM miners.
(Vote me down I don't give a fuck, I am all in PMs and miners and I'm still buying every month).
There is no reason why this can't go on beyond end of this year.
Just sayin'.