From Barclays (strategists Akito Fukunaga and Naoya Oshikubo) via Bloomberg headlines:
Rapid yen appreciation might act as a trigger to the Bank of Japan introducing a negative interest rate
- If BOJ did introduce a negative-rate policy, the yield curve would probably steepen sharply
- Short end of curve would invert, with the deepest negative yields at 2-year bond; 10- and 30-year yields would likely surge due to vanishing expectations for a further increase in JGB purchases
They go on to say that there are still reasons to think BOJ will not introduce negative rates:
- BOJ believes its current program of massive asset purchases is effective
- Unless the governor and his deputies are replaced, shifting the policy framework from quantity to rates could be seen as tantamount to BOJ dropping its view that balance-sheet expansion has had some success
- There would likely be resistance to boosting inflation when wages are growing at a slower pace and to imposing negative interest rates on the Japanese public’s deposits
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USD/JPY update … not that it needs one really …. not much going on. Its either hanging in there or poised for a fall depending on your book
ps. Talking your book only hurts yourself, you know … You’re not fooling anyone …
