BOJ Gov. Haruhiko Kuroda is no longer seen as the no-change candidate by markets, says Naka Matsuzawa, chief Japan rates strategist with Nomura. When he talked about reverse rates in a Zurich speech, he effectively started the argument in favor of a possible policy change. A 2nd term for Kuroda will now help smoothe the market response to a possible increase in yield rates, Matsuzawa says, since it gives the BOJ the possibility of communicating its intentions earlier. Matsuzawa expects the bank to raise its 10-year yield target to 0.25% from zero, a move that could be fully discounted by markets as soon as April with frequent BOJ signals and communication
The Nikkei continues to reverse the rest of this week’s decline, pushing to session highs ahead of the midday break in currently sitting up 1.2%. The ongoing rebound follows an overnight gain for dollar-yen, now approaching Y113.40 versus Y113.08 in late New York and early Tokyo trading. Oanda’s Stephen Innes thinks the pair could have gained further–and added even more to stocks’ bounce–if it weren’t for the yield-curve-control debate after Kuroda “recapitulated his hawkish deterrent overnight.” (firstname.lastname@example.org; @SuryatapaB)
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