BOJ quick note by Kay Van Petersen in Singapore - a good read

Great note by Kay – I agree.. the main point is BOJ actually acknowledging the need and demand for US Dollar funding. BOJ leads again….in policy terms…

We continue to monitor USD basis swap funding and clearly Japan was VERY BID US Dollar funding going into to this meeting…

 

Steen

 

 

BoJ Statement, Press conf. at 15:30 Tokyo Time (14:30 SG/HK)

 

·        See attached BoJ statement

·        Key new takeaway is that the BoJ is acknowledging USD funding liquidity measures that are being felt globally

o   Doubles US dollar loan facility for JP companies to $24bn for 4yrs (this correlates with what Steen has been saying about increased USD funding crisis)

(Concerned about JP exports no doubt)

·        On the rest of the statement, it's a quite weak vs. expectations. I am surprised DollarYen is still holding up above 103, we should easily be sub 102 & on the way to test 100

·        Policy rate & money market operations are unchanged, i.e. still at -10bp, bond purchases unchanged, no new maturities launched, etc.

·        Exception is doubling of equity ETF purchases

·        Overall the BoJ seems to be acknowledging (in between the lines) the limits of monetary policy

·        BoJ press conference is at 15:30 Tokyo time

·        This leaves even more heavy lifting for the fiscal side, whereby we could be getting a final announcement next week – but nothing confirmed.   

 

1Yr Yen Basis Swap

 

Last USDJPY at 103.13, H/L for the day so far 105.27 /102.71

 

 

 

-KVP

(Note that these are solely the views & opinions of KVP/sender of this email & do not constitute any trade or investment recommendations.)

 

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(Note that these are solely the views & opinions of KVP/sender of this email & do not constitute any trade or investment recommendations.)

Best regards

Kay Van-Petersen | Global Macro Strategist 

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