The Japanese-bond-stuffed banks of the world (and the collateralizers-of-last-resort) are breathing a sigh of relief at the larger-than-average open-market-operation from the BoJ today (JOMO). From what looked like certain doom and a limit-down open, the JGB market rallied magnificently (along with stocks) out of the gate - almost as if someone 'knew' (which they did here [4]) that the BoJ would come to the rescue today. Remember, as we noted earlier [5], that unlike the Fed, the BoJ does not have a set size and time schedule (for the full-month in advance aside from broad brush estimates [6]) for its bond-monetization (though we suspect the BoJ will rapidly evolve to a smaller more frequent intervention); which likely accounts for the explosive rise in volatility that is being witnessed on a daily basis in the quadrillion JPY market. Japanese stocks, after an exuberant BTFD opening, have gone one-way - down - and are now testing towards negative on the day. USDJPY tested up over 102.50 in a vain attempt to spark the green equity open but that is fading now too - breaking 102.00. It looks like being another night of correlation trading for Japanese bond and stock investors as Kuroda unleashes a Trillion-JPY-JOMO...
JGBs opened -0.75 (in line with where TSYs were trading, close to limit-down and another Halt), Stocks opened handomsely higher, helped by an 'odd' acceleration lower in JPY up to 102.5 against the USD... Soon after JGBs took off... and the correlation that no equity bull wants to see took hold...
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Charts: Bloomberg