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Immobility of the Bank of Japan, the following points of interest? ~ Financial markets of movement (November)

Immobility of the Bank of Japan, the following points of interest? ~ Financial markets of movement (November)

2 November 2017 | 10:42 am

Summary Since last September, the Bank of Japan monetary policy has continued to maintain the status quo, was also no longer be large material when viewed in the market. However, the case with an eye to about 1 years, attention point is there are many. Of particular interest in policy face “of long-term interest rate target raising, or? ETF purchases reduction is” but that. Long-term interest rates induction goal, has been deferred in “about zero percent”, but it is the future expected to increase interest rates upward pressure due to the US rate hikes continue. In addition, there is also growing wary of the side effects associated with the ultra-low interest rates. From that seen with the inflation rate also remained positive, there is also speculation that is raised is the induced target in the next year. The forecast of the author, or compelling a rapid depreciation of the yen goes, as long as it does not increase side effects to bank profitability, etc., raising of clear goals is seen as not implemented. However, the allowable range raising of induction goal is likely enough. Goal of “about zero percent”, the range is not being specified. By, for example, forgo the limit operations in the rising interest rates, it is expected to take a method of woven the upper limit expansion of the allowable range on the market. Trends of purchase ETF also be noted. Current ETF holdings amount has reached to 2 times the capital of the Bank of Japan. Believed that stock prices have also weakened the need among you are steadily rising in the near future, is there enough potential towards the pace reduced purchases. In addition to the presence or absence of reduction, a method also is noted at the time of the reduction, a simple reduction is because it is feared adverse effect on the share price, to change in terms of was downgraded to prospect in the stance that “there is no problem in the unreached” possibility is seen as high. In the structure surface, the Bank of Japan vice president of human resources is noted. Human Resources is expected to be full-scale over the next year in February. That the positive person is chosen to monetary easing but specified route, ideal form of strength and mitigation measures of mitigation stance is there is some difference by people. Contrary to the majority of the expected, if chosen for president from outside the current executive members, so that the uncertainty is generated in the continuation of the current policy. Topic: immobility of the Bank of Japan, the following points of interest? September last year since the introduction of the long and short interest rate operation with quantitative and qualitative monetary easing, the Bank of Japan monetary policy has continued to maintain the status quo. The economy is strong, prices also also is possible that the Bank of Japan in Moto to maintain the positive territory indicates the stance to continue tenaciously the current policy, also no longer be Bank of Japan monetary policy in the market is increased material view. However, the case with an eye to about 1 years, attention point is there are many. ◆ whether the inflation rate towards the 2%? First, Japan’s inflation rate, which is a prerequisite for monetary policy, expected as the Bank of Japan, for the question of whether to go on track to rise toward 2 percent, likely followed by a far situation from 2 percent. The Bank of Japan while revised downward the inflation rate forecast of 17 – 18 year in the outlook report in October, but 19 FY was maintained at around 2% , each clearly higher compared to the general view, such as a private prediction institutions to year both. From, such as the Bank of Japan is that there is a tendency to see strongly the mechanism of that and prices rise is aimed to reach out to a positive expectation, shows this to also initially high outlook, repeat the downward revision as that possibility is poor become apparent It has continued a pattern of . High possibility of a downward revision of the inflation outlook in the future, also likely be forced to postpone the time achieved in the next year in July or October. ◆ whether the change of the policy goal is? Bank of Japan is not forced to continue the postponement of prices achieve the goal, the first place the goal of 2 percent is affecting be high for Japan. And modify the target, by lowering substantially hurdle by or plurality of, will be achieved achieve in the short term. Therefore, although the possibility is noted also the question of whether, in reality, will be difficult. Is too late goals change, the Bank of Japan “was allowed a low inflation rate”, considered “a relaxed attitude retracted”, but because of the high possibility that the sharp appreciation of the yen, stock prices proceeds. If that happens, it will be the growing deflationary pressure again. ◆ Is there a strengthening of monetary easing? In, among which inflation goal is not foresee, the Bank of Japan but the point of whether to perform the strengthening of relaxation toward the goal becomes to the next point, it is unlikely to here basically . It is and why that is already limited room for relaxation. For quantitative easing expansion, but we must look for things to buy, government bonds with a decrease in community-acquired holdings, not buy at a pace of annual 80 trillion yen to Medford, also at the moment. ETF has also purchased already on a large scale , because it has been pointed out that negative effects of corporate governance and the Bank of Japan financial, it is unlikely that further increase the purchase pace. It Bank of Japan do not see large-scale asset to buy in addition. In addition, reduction of the policy interest rate for the , in a comprehensive verification of last year, admits the side effects of that too lower the interest rate the Bank of Japan itself that there is a need to pay attention “to the adverse impact on economic activity . To say whether the effect is not expected to be modestly lowered. For even reduction of Kataoka 15-year government bond yields, which committee members insisted this time, in the same manner as described above, in the generic verification, in addition to that the Bank of Japan itself admits the side effects of that too low interest rates, the long interest rate of “maturity since drop points out with effect is small “, it is unlikely that the support is widened. The remaining means, limited to powerful drugs such as helicopter money and foreign bonds purchase. Confidence decline and excessive inflation of the Bank of Japan in the case of the former, only in the case of the latter is a concern that intense criticism and various side effects from abroad, hurdles of implementation is high. Therefore, the Bank of Japan, also put off a price target achievement time, in the theory of “momentum towards the price target is maintained”, it is likely to continue the stance of a “further easing is not required”. ◆ whether the long-term interest rate target raising of, ETF purchases reduction is? Rather, it is noted whether future changes to the reduction direction of monetary easing, specific reduction of pulling up and ETF purchase pace of long-term interest rates induction goal is to is carried out. In the policy front, this is the immediate maximum point of interest. Long-term interest rates induction goal, have been deferred in the current “about zero percent”, is the future expected to increase interest rates upward pressure due to the US rate hikes continue. In addition, there is also growing wary of the side effects associated with the ultra-low interest rates . Inflation rate is also not reach at all 2%, it is expected to remain positive. Therefore, the Bank of Japan in the next year there is also speculation that modestly raise the long-term interest rates induced target, trend is noted. The forecast of the author, or compelling a rapid depreciation of the yen goes, as long as it does not increase side effects to bank profitability, etc., raising of clear goals is seen as not implemented. Raising the induction goal is because of the high risk which is regarded as the “rate hike = monetary tightening.” In that case, it increases the deflationary pressure by yen and stock prices will advance in the market, could lead to moves away from the inflation target. Among the government to schedule the consumption tax hike in 2019 fiscal year, there is a risk to the target pulling even in the sense that it could become a headwind of the previous economy. However, the deployment of raising the allowable range of long-term interest rates induction goal is likely enough. Goal of “about zero percent” does not mean that the unit has been explicitly and to what% from specifically what percentage. It is currently being considered as 0.1% upper limit, it’s for the market that most recent bid operations were performed at a timing that exceeds 0.1% is interpreted as such. More modestly raise its target, by, for example, forgo the limit operations in the interest rates rise, it is more safer way to woven the upper limit expansion of the allowable range on the market. If the upper limit raising of up to 0.2% to 0.3%, will also get explanation as within the range of “about zero percent.” ETF purchase also there is likely to be reduced in the near future, the trend is noted. Kuroda President, the total purchase ETF is stated that only “about 3% of the market capitalization of the stock market”, but rather impact on the Bank of Japan financial worrisome. The current ETF holdings have reached twice the capital. Unlike government bonds, because there is no maturity in the ETF, it is difficult to compress the once holdings while reducing the adverse effects on the by will and market purchases. Believed that stock prices have also weakened the need among you are steadily rising in the near future, the possibility of going to a reduction of purchases pace is enough. In addition to the presence or absence of the ETF purchases reduced, but methods are also noted at the time of the reduction, change a simple reduction is because it is feared adverse effect on the stock price, in terms of was downgraded to prospect in the stance that “there is no problem in the unreached” It is likely to be. What happens ◆ Bank of Japan vice president of Human Resources? System surface of the Bank of Japan also is high only in the degree of attention celebrate the milestone. President Kuroda , Iwata-Nakaso term of office end are imminent of both Vice-President , to February from January next year, expected to personnel to determine the next executive to full-scale . In the market, but reappointment of thick President Kuroda confidence in Prime Minister Shinzo Abe has been favorite view, the addition of Nakaso Vice President and Amemiya director of the current executive members, Honda parked Swiss ambassador, names such as Ito, Columbia University professor leading They are raised as a candidate. In any case, the victory is the Liberal Democratic Party in last month’s general election, because the leadership of Prime Minister Shinzo Abe has been maintained, in order to support the abenomics in the future, be positive person is chosen to monetary easing was a prescribed route. However, the ideal form of strength and mitigation measures of mitigation stance is there is some difference by people. In particular, contrary to the majority of the expected, if the president from other than the current executive members have been chosen, so that the uncertainty is generated in the continuation of the current policy. Bank of Japan Monetary Policy : revised downward the price outlook for over the next year ◆ status quo Bank of Japan in the Monetary Policy Meeting held on October 30 to 31 days, to maintain the monetary policy. Long and short interest rate operation , asset purchase policy did not have both changed. The last time, opposition to the long and short interest rates operation, Committee Kataoka that the trend has been noted, expressed their opposition this time. It claimed that “in view of lowering the long-term interest rate, 15-year government bonds government bonds purchases it is appropriate to perform to remain at less than 0.2% .” In the published outlook report after the meeting ended, as before the summary judgment of the economy, it affirmed the “expanding moderately”. In many prospect of policy committee in the same report, while slightly revised upward the real GDP growth rate of fiscal 2017 from the previous , it was revised downward the inflation rate of the 17-2006. For achieving the timing of 2 percent target, it has been maintained at “around 2007”. The president conference after the meeting, the monetary policy of the past, “are those that were determined based on the actual situation and its previous outlook of that time, each had a positive effect on the real economy”, “most appropriate positive self-evaluation and has been the monetary easing. ” For a discussion of exit, “merely going to go in light of the economy and prices and financial situation at that time”, but I think that it is necessary that the appropriate communication to the “appropriate time, it now time and not at the stage “to do with, so far in terms of showing the same negative thoughts,” Toka and perform non-traditional policy exit is inevitably difficult, nor of how to to become a serious thing as either “, it was discouraging a growing concern to the outlet. In addition, for the possibility of adjusting the yield curve before inflation goals, “or to adjust before to achieve, for how to adjust to after achieving, by economic activity and prices and financial situation at that time,” declined to say and but it did not rule out the possibility of prior achievement adjustment. Stock response to the question about the possibility of adjusting the purchase ETF is continued Among be greatly increased, showed no specific cues. On the other hand, recently, with regard to purchase the pace of the ETF is dull is, “the actual purchase amount will vary depending on the situation of the market”, “balance increase goal and expression with a width” about 6 trillion yen ” it going on, was for the achievement period of the target change of pace purchase and why not be “defines a specific point in time to show some acceptable attitude. For the stock market, said, “movement that indicates the bullish excessive expectations have not been observed”, showed the view that not special problem. It should be noted that the president was asked about the qualities of the next president, “that the light of better economic situation, the actual situation”, “to have a theoretical understanding of the economic and financial”, have a “international human network It listed three points that are that “you are. Looking back and expected for the time being of the financial market ◆ 10-year government bond yield To move the beginning of the month 0.0% stand late start of October, the end of also 0.0% stand in the second half. The beginning of the month, after the start of 0.0 percent the second half, a good supply and demand has been confirmed by the Bank of Japan operations, it dropped to the mid 0.0% table to four days. In addition, the five days received the news of Koike not run for the House of Representatives election, it decreased to 0.0% range first half from financial concerns recession. Then, rising to the second half of 0.0 percent stand in 10 days by warning relaxation to the good US economic indicators and North Korea risk. Mid and later, despite increasing interest rates upward pressure in response to the passed US budget resolution, works to the growing rise suppression of current mitigation continued observation associated with the ruling party victory in the House of Representatives election, the transition was stalemate in the second half of 0.0% base . Among the not fixed even speculation to the next FRB chairman personnel, was the transition of the 0.0 percent second half toward the end of the month. The immediate expected
feet remained in the vicinity of the mid-0.0% table. US economic indicators is noticeable that swing over to the pre-prediction, the time being likely US interest rates rise due to the increase of the interest rate hike is in the interest rates upward pressure on Japan. On the other hand, wary of the geopolitical risk, such as nuclear and missile tests and Plaça independent problem by North Korea is seen to continue, it will increase suppression factors of interest rates. In addition, in order to also increase vigilance to 0.1% approaches and the Bank of Japan interest rate measures to curb trigger, rising room is inevitably to a limited extent. It is likely to change in the level slightly lower than the 0.1 percent. ◆ dollar yen rate Started in October motion the beginning of the month 112 yen level latter half of, the end of the month to the 113 yen level. The beginning of the month, but was put on the 113 yen level in 6 days from expectations of strong US economic indicators and tax reform, the yen was bought from the growing uncertainty of vigilance and rice tax reform to the North Korea situation, 112 in 11 days decline in the circle stand the first half. Then it was followed by a deployment for a while stalemate, global risk appetite and is in in response to the budget resolution passed in the US Senate 20 days rose to 113 yen level. The additional 23 days in response to a ruling party victory in the House of Representatives election, became the 114 yen level from monetary easing prolonged observation. And later, it intensified wait-and-see attitude staring the trend of the FRB next president human resources and tax reform, was followed by a seesawing of deployment around the 113 yen level toward the end of the month. Enter the immediate expected
this month, including the strength dollar in response to the strong US economic indicators, but contains the dollar selling from the observation of the Powell director is chosen as the next FRB chairman, feet in the second half 113 yen level transition. US economic indicators is noticeable that swing over to the pre-prediction, the time being cheap increases the dollar pressure from rising interest rate hike pace accelerated observation. Temporarily put 115 yen is also likely. However, terms of the yen-selling positions of speculators are already up high level loading, also strongly uncertainty of the US tax reform and North Korea situation, immediate depreciation of the yen room is going to be limited. It should be noted, next FRB chairman was announced tonight, became expected to Powell FRB directors to be the most promising and the eye is determined officially. Although there is a possibility that the swing to the dollar after the decision from the dovish image, after already woven largely, gradual rate hike routes from resemble of to be followed, the reaction will remain limited. ◆ Euro dollar rate Starting from the motion the beginning of the month 1.17 US dollars stand the first half of October, the end of the month 1.16 dollars the first half. The beginning of the month, in response to the pro-independence victory in Catalonia residents voting, after the euro began to fall, in response to the good economic indicators of the euro area to four days rising 1.17 dollars the second half. Further rose to 1.18 US dollars stand the second half of the 12 days by quantitative easing reduction of the ECB is conscious. Then it was followed by a movement with no sense of direction 1.18 dollars the first half from the mid 1.17 US dollars stand, strengthened the view that the reduction of quantitative easing in response to the ECB Governing Council meeting and the subsequent Draghi President conference becomes gentle, 27 days It plummeted to 1.16 US dollars stand the first half. Vigilance to Catalonia situation also becomes weigh, transition of 1.16 dollars toward the end of the month continues. The immediate expected
feet increased slightly against the dollar pressure, transition 1.16 dollars the second half. Through the last month of the ECB Executive Board, in addition to observation of the quantitative easing lingering in the euro area is becoming penetrate the market, and smoldering also wary of the Catalonia situation tense, reason to buy the euro aggressively missing especially Absent. Seen for a while upside of the euro is followed by a heavy situation, by dollar pressure due to the rise in the US interest rate hike rather, euro-dollar has seen that there is a high possibility that slightly including weak. data of the journal described are those which were obtained and processed from a variety of sources of information, it does not guarantee its accuracy and safety. In addition, this magazine is the information provided by the purpose, of opinions and predictions described, not intended to solicit the engagement or termination of any contract. Takashi Ueno NLI Research Institute Economic Research Department , Senior Economist [Than Articles NLI Research Institute] – 1 from the introduction year, evaluation – financial markets of the movement of the yield curve control – Bank of Japan of – financial markets should reconsider the positioning of the price target movement – Bank of Japan, “the sixth time of honesty” is also difficult or ~ financial market moves – overheating feeling of the stock price to hurdle the dollar yen rise – Market Carte November · Dollar yen, 115 yen breakthrough of conditions – financial market moves

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