The market expects the Bank of Japan to relax its control over the bond market this week.
As the Japanese yen falls33Annual low point, Japanese government bond yields hit10At its highest level in years, people are increasingly expecting the Bank of Japan(Bank of Japan)This week, control over the bond market will be relaxed. But investors may be more concerned about the Governor of the Bank of Japan, Kazuo Ueda(Kazuo Ueda)Will key signals be sent regarding inflation trends, paving the way for Japan to end its last global negative interest rates. Benchmark10The yield of the one-year Japanese treasury bond bond reached0.89%, for2013year7The highest level since the beginning of the month. Therefore, it is widely expected that the Bank of Japan will12Modify its unconventional 'yield curve control' for the third time within months(YCC)Policy: Purchase government bonds to keep yields below a fixed level. M&GJim Leavis, Chief Investment Officer of the Public Fixed Income Division(Jim Leaviss)I feel that the market's expected yield curve control measures will be adjusted and have begun to reflect this The last modification by the Bank of Japan10The trading range of one-year Japanese treasury bond bond yield is7month. UBS(UBS)Currently, it is expected that the Bank of Japan will further expand this range on Tuesday, starting from1%Expand to1.5%, and it is expected that10The target yield of one-year Japanese treasury bond bonds will be adjusted from zero to0.5%about. Barclays(Barclays)It is expected that the Bank of Japan will completely cancel the yield curve control on Tuesday. However, Goldman Sachs(Goldman Sachs)Nomura(Nomura)Morgan Stanley Mitsubishi UFJ(Morgan Stanley MUFG)The Bank of Japan may adhere to the current monetary policy framework. The Bank of Japan is the only major central bank that has not raised interest rates in the past two years, despite continuous inflation rates18Months higher than target, but Bank of Japan still maintains policy rate at negative0.1%。 But with10The yield of one-year US treasury bond bonds soared to16At the highest level in years, the widening gap in borrowing costs between Japan and the United States and Europe has put pressure on the Bank of Japan to tighten policy amid the weakening of the yen. Last week, the Japanese yen fell below the US dollar exchange rate1USD exchange rate150The Japanese yen has raised concerns about inflation as the cost of imported goods rises. Previously, breakthroughs150The barrier of the Japanese yen once prompted the Japanese authorities to intervene in the exchange rate. Although the Japanese yen has stabilizedforeign exchangeTraders believe that this is temporary and expect that if the Bank of Japan does not take measures or only makes superficial adjustments to the yield curve control after the two-day meetings on Monday and Tuesday, the yen will face a more severe test. Foreign exchange analysts suggest that the Japanese government may accept1USD exchange rate152to153The reasonable level of the Japanese yen. The widening interest rate differential between Japan and the United States means that intervention may not be as effective2022Year. International Monetary Fund(IMF)stay10In mid month, a comment was made stating that it believed there was no reason to intervene. This statement has made the market more convinced,150The level of the Japanese yen no longer represents Japan's "bottom line", although the weakening of the yen keeps inflation rates at the Bank of Japan2%Above the goal. The Bank of Japan believes that the main factor driving up Japanese prices is the rise in import costs, and the central bank needs to wait for more sustainable signs of wage growth to ensure that the Japanese economy does not fall back into decades long deflation. Kazuo Ueda is here9In a speech this month, it was pointed out that wage growth has begun to have an impact on prices. Economists are paying attention to whether Mr. Ueda will acknowledge a stronger correlation between wages and prices. Even if the Bank of Japan does not take any action this time, it would not be surprising if it starts to convey hawkish messages and prepare the public for future interest rate hikes, "said UBS analystMasamichi Adachiexpress. Driven by the decline in imported fuel prices, Japan9The monthly core inflation rate has dropped for the first time in over a year3%following. After excluding energy and fresh food prices, the inflation rate has also increased from last month's4.3%lower4.2%。 However, some economists warn that Japan's above target inflation rate may be more sticky than predicted by the Bank of Japan. this year10Month, Japan Trade Union(Japan Trade Union Confederation)We will seek a larger salary increase in next year's negotiations. Japanese Prime Minister Fumio Kishida(Fumio Kishida)Also promise, to20century30In the mid-19th century, the minimum wage was raised from the hourly rate1000The Japanese yen has increased to1500Japanese yen. Global investors are closely monitoring Japanese bond yields as Japanese institutions are one of the largest holders of US and European bonds. More attractive returns within Japan may trigger a wave of selling in other bond markets. We believe that removing yield curve controls can stimulate Japanese investors, but a more important driving factor may be when the Bank of Japan ends negative interest rates and begins to raise short-term policy rates, "said Nomura Securities economistYusuke Miyairiexpress. He added: "The yield of Japanese treasury bond is still not high enough to attract them to repatriate funds from overseas to Japan." |
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