{"id":27253,"date":"2023-04-28T04:54:09","date_gmt":"2023-04-28T04:54:09","guid":{"rendered":"http:\/\/lynettelockhart.com\/client\/marketmind-boj-launches-no-rush\/"},"modified":"2023-04-28T04:58:13","modified_gmt":"2023-04-28T04:58:13","slug":"marketmind-boj-launches-no-rush","status":"publish","type":"post","link":"http:\/\/lynettelockhart.com\/client\/marketmind-boj-launches-no-rush\/","title":{"rendered":"Marketmind: BOJ launches no-rush review, bonds rally"},"content":{"rendered":"

A look at the day ahead in European and global markets from Wayne Cole.<\/p>\n

It was a long wait, but the Bank of Japan finally decided to hurry up and do nothing – well, almost nothing. <\/p>\n

The BOJ, it seems, will “patiently” continue with easing while “nimbly” responding to developments. Yield curve control remains as is, as do rates at -0.1%. So does the commitment to keeping them until 2% inflation is achieved in a stable manner. <\/p>\n

Seemingly the only real change to guidance was to the sentence that it will not hesitate to take additional easing measures if necessary. The BOJ dropped the clause: “it also expects short- and long-term policy interest rates to remain at their present levels or lower”.<\/p>\n

So, it is committed to its easy policy, but rates could go up? A tricky one to square.<\/p>\n

In the same vein, the bank revised up its forecasts for CPI, while giving mixed signals on GDP. The key CPI ex-food measure is seen at 1.8% for fiscal 2023 and 2.0% for 2024, but crucially not above 2.0% as its remit requires.<\/p>\n

While the BOJ did commit to a review of its interminable easing campaign, it proposed to finish it within one to one-and-a-half years. No hurry then.<\/p>\n

For now, the market has taken the statement, and particularly the extended review time frame, as dovish, and pushed the dollar up 0.6% to 134.78 yen. Japanese 10-year bond yields are down almost 4 basis points at 0.425%, and Treasury yields dipped a fraction.<\/p>\n

A lot of Western analysts assume YCC is done and now we’re just arguing over the burial date, whereas the Japanese tend to see everything over the long run: It’s only been a couple of decades, what’s the rush?<\/p>\n

In any case, the next policy meeting is not until June 16, so the market has time to prepare.<\/p>\n

The Nikkei newspaper partly stole the show by breaking the news while the BOJ was still meeting, although the initial reporting was a little confused on what actually the bank was doing and triggered some volatility.<\/p>\n

Elsewhere, there was a mixed market reaction to results from retail behemoth Amazon which on the face of it beat forecasts with revenue growth of 9% to $127 billion. Its shares surged 10% at one stage, only to finish 2.1% lower after hours.<\/p>\n

Maybe investors weren’t happy that revenue at its much-hyped AWS cloud unit grew by 16%, compared with 37% a year earlier, and the company in its conference call revealed April growth was about five percentage points lower than that. <\/p>\n

Intel, on the other hand, talked up the prospect of improved margins in the second half, albeit from record lows, and was rewarded with a share rise of 5% after hours.<\/p>\n

Looking ahead, a word of warning on the U.S. core PCE price index due later. Forecasts for the Fed’s favoured inflation indicator centre on a rise of 0.3% in March, but yesterday’s GDP data suggest a risk it could be as high as 0.5%. <\/p>\n

Short-term yields have already spiked and market pricing for a Fed hike next week is back up to 85%, so a result like that would not be welcome.<\/p>\n

Key developments that could influence markets on Friday: <\/p>\n

– ECB chief Christine Lagarde holds a press conference following a Eurogroup meeting<\/p>\n

– Euro zone finance ministers to discuss deposit guarantees in EU’s banking union<\/p>\n

– Data on EU GDP for Q1 and German inflation for April<\/p>\n

– U.S. personal income and consumption, PCE indexes, employment cost index and the Chicago PMI<\/p>\n

\n

(By Wayne Cole; Editing by Edmund Klamann)<\/p>\n

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A look at the day ahead in European and global markets from Wayne Cole. It was a long wait, but the Bank of Japan finally decided to hurry up and do nothing – well, almost nothing. The BOJ, it seems, will “patiently” continue with easing while “nimbly” responding to developments. Yield curve control remains as […]<\/p>\n","protected":false},"author":8,"featured_media":27254,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[1213],"tags":[],"class_list":["post-27253","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-u-s-business"],"jetpack_featured_media_url":"http:\/\/lynettelockhart.com\/client\/wp-content\/uploads\/Reuters_Direct_Media\/USOnlineReportBusinessNews\/tagreuters.com2023binary_LYNXMPEJ3R055-VIEWIMAGE.jpg","_links":{"self":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/27253","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/comments?post=27253"}],"version-history":[{"count":1,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/27253\/revisions"}],"predecessor-version":[{"id":27255,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/27253\/revisions\/27255"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/media\/27254"}],"wp:attachment":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/media?parent=27253"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/categories?post=27253"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/tags?post=27253"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}