'Mysterious' JPY-Selling, Stock-Buying Panic Ensues After Bank Of Japan Leaves Monetary Policy Unchanged

Tyler Durden's picture

Having disappointed an expectant market by voting overwhelmingly (8-1) to leave monetary policy unchanged, the initial plunge in USDJPY and Japanese stocks has found a mysterious (and massive) JPY seller and Nikkei 225 buyer. USDJPY is now 100 pips and Nikkei 225 500 points above post-BOJ dip lows... because hawkish is the new bullish...


Perception is reflexive reality is perception...


And if USDJPY is rising, then US equities are rising (Dow Futs +80)


As we detailed earlier...

The last time The BoJ increased QQE it was a close vote (just 5 to 4) as The Fed ended QE3 and with 16 of the 36 'qualified' economists forecasting additional easing tonight, uncertainty was high going in with USDJPY and NKY drifting lower (and JGB yields rising) as recent data suggests Japan will escape a technical recession (even as household spending slides ever lower) buying Kuroda time (before unleashing his own bazooka). Then, just 25 minutes late, Kuroda unleashed... nothing:


It appears Kuroda-san has chosen to wait til December and 'react' to The Fed, even though his inaction may just be the catalyst for keeping The Fed on hold for longer once again. USDJPy tumbled and global stocks are following for now.

The Bank of Japan Statement:

1. At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided, by an 8-1 majority 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 80 trillion yen.


2. With regard to the asset purchases, the Bank decided, by an 8-1 majority vote, to continue with the following guidelines:


a) The Bank will purchase Japanese government bonds (JGBs) so that their amount outstanding will increase at an annual pace of about 80 trillion yen.  With a view to encouraging a decline in interest rates across the entire yield curve, the Bank will conduct purchases in a flexible manner in accordance with financial market conditions.  The average remaining maturity of the Bank's JGB purchases will be about 7-10 years.


b) The Bank will purchase exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs) so that their amounts outstanding will increase at annual paces of about 3 trillion yen and about 90 billion yen respectively. 


c) As for CP and corporate bonds, the Bank will maintain their amounts outstanding at about 2.2 trillion yen and about 3.2 trillion yen respectively. 

Japanese stocks and USDJPY were drifting lower in to the statement....and dumped on the NOTHING


US equity futures are giving back some of the after-hours gains...


And JGB yields were heading higher into the statement... and rose further after The BoJ did nothing...



Next up the press conference... to explain how this is really dovish...

Bank will release updated inflation and GDP forecasts at 3:00 p.m. local time, and Governor Haruhiko Kuroda’s press conference will start at 3:30 p.m.


Charts: Bloomberg

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BlueViolet's picture
BlueViolet (not verified) Oct 29, 2015 10:41 PM

Japan is under American occupation. So BOJ policies are no different than the Fed's. And that's why the central bankers themselves caused MONEY to become itself the problem. At one point all HELL will break loose >> http://wp.me/p4OZ4v-2GY

y3maxx's picture

WW#3  .... starting

WW#3   ... delayed

W W #3 on its way...

1st...Japan will attack North Korea because its Island is dying from Nuclear.

2nd...Iran will attack Iraq.

3rd...USSA attacks Cuba

VATICANT's picture

Don't worry. VATICANT will save the day. My church is so fucking rich. Richer than that assface Trump!

Ghordius's picture

-1, you forgot to update your avatar. or to write something relevant or funny or informative or original. try again, try harder, the Japanese would say. btw, isn't Trump broke? I had that vague notion

and that, folks, is my two cents about Japan: they will always try harder

RadioFlyer's picture
RadioFlyer (not verified) VATICANT Oct 30, 2015 6:48 AM

As rich as THE QUEEN OF ENGLAND corporation?

Ghordius's picture

WW3 might get into future history books under an entry like this:

"At a certain stage, Americans talked incessantly on how they got where they were, and furiously discussed how they could repeat their amazing WW2 post-war period.

This discussion was made more difficult by Prof. Dr. Krugman, who fantasized, like many of his compatriots, of repeating this feat by having lots and lots of windows broken, and in doubt bomb whole window glass industries for growth.

At the end, Dr. Krugman started his own Cargo Cult, that consisted in kneeling at airports and asking Martians to land and try to conquer the US, only to be then repelled, invaded and then pacified, so that new markets would be opened for American services and products.

Meanwhile, some of his followers, some not even realizing they were his followers, chanted a prototype version of his cult by chanting "WW3!" "WW3!" in various blogs"

1st is a bit silly, 2nd is wrong. Iran is all over in Iraq. You could say they are the new friends in the region. 3rd is... I'll pass that

PlayMoney's picture

Central benker could step up to a mic, break wind, walk away, and stocks would be bought.

DavidC's picture

You mean that ISN'T what they've been doing?


y3maxx's picture

#4   Germany attacks Poland

#5    India attacks Pakistan

TBT or not TBT's picture

# 8 Germans bomb Pearl Harbor and its on.   

Ghordius's picture

bastards. remember they also blew up battleship Alamo in Maine. bastards

JustAboutThatActionBoss's picture

I got hosed again.... Futures are now ripping higher.... THIS IS FUCKING INSANE AND WRONG...


Please stop the nanny state and let markets flow freely....



RopeADope's picture

That will not happen until humans go the way of the dodo bird.

pebblewriter's picture

Feel your pain...  I can't bring myself to type the word "market" without quotation marks anymore.

It's sickening, but I don't know how they can back out now.  I honestly think they're in too deep, with BoJ and GPIF equity holdings equaling nearly 15% of Japan's GDP and BoJ indebted at 70X its capital.


herkomilchen's picture

I can't bring myself to type the word "market" without quotation marks anymore.

I used to think the quotation marks were exaggerating the state of affairs.  I'm starting to think maybe not.  When every single thing that happens (or doesn't happen) is treated as a bullish signal, that's kind of a tipoff.

pebblewriter's picture

I'm not sure how closely you watch the "markets", but I sit in front of six monitors all day long.  If ES/SPX suddenly spring to life, it's almost always because USDJPY or CL just ticked higher. 

Eric Hunsader and others have documented the frequent CL spoofing.  And, currency manipulation has been constantly in the headlines over the past couple of years.

In my mind's eye, there's a 23 year-old, pimply faced MIT grad in a windowless room with two buttons marked "ramp CL" and "ramp USDJPY."  When SPX starts to fall too much, or needs help getting past some kind of resistance, he repeatedly smashes one or both of those buttons until the desired reversal is achieved. 

After the cash close, either can be reset back to where it was without affecting stocks, because ES is so easily propped up in the after hours.

Sages wife's picture

The car is now travelling at 20 mph. It's speed will increase steadily at 1 mph per second. Jump whenever you're ready.

dicksburnt's picture


Cental Banking is just wrong.  Never should have been.  This is the what the end game of fiat central banking looks like.  Next up they will be sending us their money to spend.

Atomizer's picture

Here comes the Japan Government Stimulus angle. Too fucking hilarious. 

mojojojo's picture


It will be a violent and bloody deleveraging. Blood will be figuratively flooding the streets. Think of all that pension money, eeking out what little yield in can scrape from the market, or just gamble the lot in equity securities. Let the problem be the solution, as we drive off the cliff of sanity. As we haven't hit the ground, everything is fine.

xrxs's picture

Really?  But they don't own all of the ETFs yet.

Atomizer's picture

Holding the ETF portfolio in a potato sack. Waiting for Santa Claus to wisk it away. 

Official NORAD Santa Tracker

TheRideNeverEnds's picture

aaaand the algos immediately take 'the market' right back to highs of the day.

thanks 'free market'!

Edit: correction; to new all time highs in the NQ

Uber bullish

Sizzurp's picture

The picture of that dude laughing cracks me up everytime.  I like to imagine him saying "what kind of crazy shit can we do next", while he laughs his ass.

BTW, Tyler the adds on this site are terrible.  They are constantly crashing my computer and make it difficult to type.  I hate them.

mojojojo's picture

install adblock and ublock on mozilla

Nobody For President's picture

Or Chrome - no ads and no problems with ZH. 
Adblock or adblock plus - both work fine with Chrome. 

Yen Cross's picture

  I think team "Abe & Kuroda", are starting to have nightmares from reading Zero Hedge. :-D

  Perhaps we should have a daily BoJ bashing segment 5 minutes before the Tokyo Fix.

Atomizer's picture

A 24/7 FX roundup before market rigs the pea and shell game. I'm in! 

NDXTrader's picture

Never fear, comrades. They've pushed everything way green. USD/JPY from -63 to +20 in 30 minutes. Do not believe your lying eyes - no new stimulus is positive

RopeADope's picture

Provided a nice entry point however. No one was really gung-ho about jumping in until the 121.38/50 range anyways.

Nobody For President's picture

Keeping rates at zero is positive.

No new stimulus is positive.

Raising rates is positive.

Stimulus is positive.

NIRP is positive.

BTFD bitchez.




mojojojo's picture

Anyway, don't the heads of central banks and others take direction from the BIS? This madness is not random. It is crazy, but they have meetings and discuss these matters. Unlike gravity, interest rates can be manipulated. This race to the bottom that we're playing, whether FED, ECB, BOJ, PBOC, we're cutting and effectively not changing habits. It's not one separate system. Japan could cause a global meltdown anytime it wishes. The most hilarious part is, the charade, the game, the acting. These rent-seeking parasitical ppl

pebblewriter's picture

"Japan could cause a global meltdown anytime it wishes."

That's a really interesting question.  We know they got themselves into this mess.  But, short of intentionally starting a panic by liquidating all $700 billion in BoJ and GPIF stocks, I wonder if scaling back or discontinuing QQE really would cause a global meltdown. 

I suspect that other central banks, hedge funds and TBTF's could collectively manipulate the yen lower and, thus, keep the yen carry trade alive.  Hell, maybe they already are.  The carry trade doesn't care who's dumping yen, as long as it's getting cheaper.

I suppose Kuroda could announce that henceforth the yen will be pegged 75 to the USD.  That would do it.  Of course, it would also put Toyota, Mitsubishi and Honda out of business overnight.



TheRideNeverEnds's picture

Precisely, it no coincidence the day the FED announced the taper the BoJ started a new QE. It is round robin printing from here on out.

IF (big if) the FED raises rates in December or whenever, someone will start a new QE of some sort.

The central bank collusion is not even a secret anymore.

herkomilchen's picture

It's like fractional reserve banking.  All banks have to do it in concert, otherwise note redemptions at low-inflators won't be equally offset by redemptions at high-inflators and high-inflators will go bust from the steady outflow of reserves due to the imbalance.  But if everyone is doing it equally, redemptions balance, and the inflation can continue.

Central Bank inflating is the same as private bank levering and international foreign exchange is the equivalent mechanism as redemption.

Crocodile's picture

I agree because if everyone is on board, then what can stop the machinery?  Even if they bought everything with "thin-air", then they just create more to buy.  It does not stop till the masses have nothing and therefore nothing left to loose, then thy loose it. 


The "Superiors" hope they will have murdered enough people by various methods including civil war to make it controllable, but they will have only limited success at about 50% population reduction according to Christ, who is not able to lie and has told us ahead of time.

Crocodile's picture

QE has never stopped; if it did, then the markets would take an immediate 50-80% haircut.  That will not happen until every last dollar is squeezed out of the system.  The goal of Central Planning, via Agenda21, is to purge the herd by 90%.  There are many ways to achieve that and one is to impoverish everyone and make having children undesirable and have plenty of methods for getting rid of the "accidents". 


There is no appreciation for life because since they believe in macro evolution, the natural and logical conclusions are that some are superior and some are inferior, the superior know how to best maintain the species and the earth and that means ridding the earth of the inferiors, the majority from the perspective of the superiors.


Your belief about origins will determine your worldview.   The Biblical worldview is the only one that values all life and does not distinguish between inferior or superior because all human life is valuable since its origin is God.  It values life, family, and marriage and these things are the fabric that holds and helps societies flourish.  Attack and destroy those values and you get what we see today.  It will get much worse because we are left to our reasoning and humans have fallen reasoning skills as far as world views are concerned.


Remember, what the elite plan on doing is perfectly logical if you believe that we have too many people and too few resources and if you believe mankind has been around for millions of years and will be for millions more, then people must be eliminated to preserve the species and save "mother earth".  This is aburd &  foolishness from a true biblical view, which people hate because if it is true, then Jesus is God and all will be held accountable to Jesus.  All are sinners and people have difficulty in acknowledging they are created beings much less admitting they are sinners & will be judge as such.   The standard is Jesus and if you are not a s righteous as He is, then you have a real problem.

explosivo's picture

Interest rates can only be manipulated in the short term, like gravity. For example, a plane defies gravity for a short while at the cost of burning jet fuel. The CBs defy interest rate gravity at the cost of decent people's savings (stolen via inflation).

actionjacksonbrownie's picture

So... you are saying the central banks can only manipulate rates until they run out of ink and paper?Well, I think they will ban ink and paper when they run out of that, and mandate usage of 1s and 0s for eternity. THEN!!.... then we will fianlly get an end to all this CB bullshit. Just like bitcon - only so many 1s to go around.



Ghordius's picture

"Anyway, don't the heads of central banks and others take direction from the BIS?"

a widely circulated... myth. Yes, the BIS is where they meet, and discuss (all secret, what else?), while the BIS itself is more like a shared facility for 60 (out of 100+) of them

note this little detail, then it's important, as much as which central banks are shareholders of the IMF, or the ECB

YesWeKahn's picture

One word: BUY. this is what FED wants you to do so that people feel rich, espesially the rich people. There was a black guy asking Jebb Bush why the rich people pay little tax while poor people have to pay more (relatively). Jebb Bush replied: rich people create jobs. Fuck the idiocy.

pebblewriter's picture

Equities obviously get a boost from well-timed purchases by the BoJ and GPIF.

Aside from that, QQE doesn't matter. That is, lower interest rates and less liquid JGB's won't make much difference. 

The ONLY thing that has mattered, and will continue to matter, is that the yen depreciates against the dollar (increase in USDJPY.)  THAT'S what drives the yen carry trade -- not the amount of QQE. 


A cheaper yen was a natural byproduct of QQE.  But, they can and do manipulate the yen lower without heaping on additional QQE.




r3ct1f13r's picture

What do you think the upper limit is before boom?

I'm thinking mid 220's.

pebblewriter's picture

I have no clue.  But, I think it'll be when the price of everything Japan imports becomes untenable - especially oil and fresh food.  My favorite conspiracy theory is that the oil market was intentionally crashed partly to accommodate the yen carry trade: 


It's made oil affordable even as the yen has cratered, but fresh food is up 25% in the last 2 1/2 years -- this as taxes have gone up and real income is declining.


The tricky part is keeping stocks from sliding and interest rates at zero.  For $5 trillion, they could essentially buy the Nikkei.  And, they already own something around 30% of the JGBs - growing another 10 percentage points per year. 

I guess that's the ultimate outcome.  Japan owns its stock and bond markets, paying itself 0% interest on an ever increasing debt load.  No one in their right mind would accept yen for payment, so that's the limiting factor -- the cost of imports for an aging, island country that must import a lot of stuff.  Ultimately, I believe, they have to default/restructure their debt and start over.

Something to think about!

phantom blot's picture

Central Bank does nothing on interest rates, market sells Nikkei and buys yen, central bank buys Nikkei and sells yen "covertly", weak shorts cover, Europe opens, sells the shit out of the nikkei and buys the shit out of yen...central bank dickwads clock off at 3:30pm in Tokyo and head down to the shitty little izakaya near the railway station, drink 14 Sapporo long necks and get on the train at 10pm for the 90 minute commute back home for the weekend. Start again Monday. FUCKING pathetic. Markets are laughing at CBs now - no credibility = lets fuck with these morons 

Trips Trading's picture

Based on my own developed cyclical model, it points to a HIGH OCT 29/30 for the next corrective wave, 1st target is 38.2% fibonacci level @ 2010 area, 2nd Target is 1960 (61.8%). 

10 cycles are lining up yesterday and today, massive! 

Be careful with longs for the short term. 

After the corrective wave down, I expect Higher Highs into 2016 to finish the chronicle 2000-2008-2016. After that, we all know what's going to happen :)


Crocodile's picture

If it happens as you say, then it was by design and NOT by chance or technical's, for the markets are totally controlled by the Central Planners - period!

GreatUncle's picture

Lol creating 80 trillion out of fresh air.

This is the problem and never the cure.