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18 Dec 2015
BoJ came out with all guns blazing – Deutsche Bank
FXStreet (Delhi) – Jim Reid, Research Analyst at Deutsche Bank, suggests that the force has been with the BoJ this morning.
Key Quotes
“While the current ¥80tn expansion of the monetary base was kept unchanged as expected, markets initially reacted positively to the more surprising news that the BoJ is to make additional purchases of ETF's on top of the current ¥3tn of purchases that the BoJ currently makes each year. The accompanying statement shows that the Bank's new additional program will have an annual budget of ¥300bn and will be initially tied to the JPX-Nikkei 400 index. It's also been announced that the BoJ is to increase the maximum amount of each issue of Japanese REIT's it can buy.”
“These measures were passed with a 6-3 majority. On top of this, the BoJ also announced that it is to extend the average remaining maturing of JGB purchases to about 7-12 years from the beginning of next year, from 7-10 years currently. The price action has been interesting. The Nikkei initially surged as much as +2.50% immediately post the headlines, but has actually faded since and is now down -1.20%. The Yen was also nearly 1% weaker but it is actually a touch firmer on the day now as we go to print, while 10y JGB yields are down 1bp.”
Key Quotes
“While the current ¥80tn expansion of the monetary base was kept unchanged as expected, markets initially reacted positively to the more surprising news that the BoJ is to make additional purchases of ETF's on top of the current ¥3tn of purchases that the BoJ currently makes each year. The accompanying statement shows that the Bank's new additional program will have an annual budget of ¥300bn and will be initially tied to the JPX-Nikkei 400 index. It's also been announced that the BoJ is to increase the maximum amount of each issue of Japanese REIT's it can buy.”
“These measures were passed with a 6-3 majority. On top of this, the BoJ also announced that it is to extend the average remaining maturing of JGB purchases to about 7-12 years from the beginning of next year, from 7-10 years currently. The price action has been interesting. The Nikkei initially surged as much as +2.50% immediately post the headlines, but has actually faded since and is now down -1.20%. The Yen was also nearly 1% weaker but it is actually a touch firmer on the day now as we go to print, while 10y JGB yields are down 1bp.”