The very late-cyclical pattern of a hawkish BoJ paired with a dovish Fed is now visible to everyone. How far will it take USDJPY lower, and will it pull the rug from under cross-asset markets?
Something for your Espresso: Unions paving the way for Ueda
>5% wage gains for the Rengo union members in Japan, which paves the way for policy action from the BoJ. Meanwhile, the PBOC refrained from cutting. Possibly as rate cuts are off the table in the US given the PPI developments?
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Japan Watch: How will Ueda cope with all of the “pauses”?
Ueda has got the situation under control and managed to orchestrate a whole string of positive market developments on the back of his monetary policy mix. There are no major reasons to change course. Steepen the JPY curve slowly, while accommodating the short-end.
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Something for your Espresso: A trial balloon from Ueda
Ueda giving an exclusive interview for the first time since April trying to talk up the JPY but will he succeed? We doubt it. The global steepener pressure remains intact.
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Japan Watch: 1% with added flexibility – more or less printing from here?
The Bank of Japan did indeed move the needle as the big spike in the short-term inflation forecast provided them with an excuse. The big question is whether the move will lead to more or less printing? And whether the packaging is dovish enough to keep markets calm?
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Something for your Espresso: 1-1.5 years of inaction? Not so fast
The Bank of Japan left us in the dark on whether monetary policy is now on autopilot for 1-1.5yrs, while a committee figures out how to exit the YCC program. Changes to the statement suggests that the policy CAN be changed.
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Something for your Espresso: Oh,oh, Ueda
Bank of Japan will meet later this week and Ueda provided some clarity on the prerequisites for a YCC hike earlier. Is a YCC-hike off the table near term? And could BoJ surprise with a deposit rate hike this week
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Something for your Espresso: Nothing Burger Ueda
We have been up early to watch the hearings in Japan, but very little new was brought to the table. Here are the take-aways from the hearings in Japan.
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