May 13, 2018

Under Governor Haruhiko Kuroda, the Bank of Japan has pursued a relatively strong quantitative easing program, and applied negative interest-rates on a large portion of bank deposits. The Japanese central bank buys 10-year Japanese government bonds (JGBs), when rates rise above 0%. The BoJ has also become the largest buyer of equities in Japan, though its purchases of ETFs. The central bank’s short-term policy rate is 0.1%, and the BoJ buys about $730 billion in bonds every year. The BoJ owns about 45% of the entire stock of JGBs. By the pedestrian and ossified standards of central-bankers, Kuroda is a… Read More

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The Week Ending Friday May 11th 2018 US equities stormed back up last week rising 3%, while the USD was volatile but ended up flat.  Bond yields and commodities were also flat. A reasonable result for nominal growth expectations after the previous week’s disappointment based on USD strength reflecting fears of, or itself being, excessive monetary tightening. The main economic news that partly drove the outcome this week was the weaker than expected Core CPI reading for April. Although hawks tried to claim it was due to some funny one-off movements markets ignored it altogether, thus allowing the great tech… Read More

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