For a brief few minutes, overnight saw exactly the reaction that central planners had hoped for when The Bank Of Japan announced it would buy 'moar' stock ETFs and extend bond duration buying ad nauseum. However, within just 15 minutes something happened that we haven't seen since the world embarked on this experimental nightmare. Despite the front-ran promises to buy Japanese stocks "whatever it takes" traders sold... and sold large.
After a 500 point "business as usual" spike, Nikkeie 225 crashes over 1000 points as traders recognized The BoJ's desperation...
As Bloomberg reports,
The new program is in addition to the 3 trillion yen the bank already spends on ETFs each year, the BOJ said on Friday. The BOJ also said it would extend the average maturity of holdings of Japanese government bonds to seven to 12 years, and increase the amount of individual Japanese real estate investment trusts it can own. The Topix index sank 1.8 percent to 1,537.10 at the close in Tokyo, reversing a gain of as much as 2 percent.
“At 300 billion yen, it’s on the scale of margin of error. The impact to the stock market will not be big,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd. “If it’s this small, some investors will think this is the best they can do. Kuroda himself says he never does anything half-baked, but frankly speaking this is half-baked.”
“Investors were buying on hope,” said Hiroaki Hiwada, a Tokyo-based strategist at Toyo Securities Co. “But they are realizing now that it’s not actually a big deal,” he said. “People are disappointed after looking at the details closely.”
As Kuroda loses his magic touch, the overwhelming sense of panic washes across every carry trader and algo hesdline reader in the world