When the market throws the long-awaited gift,

오건영님글 ㅣ Two defenders.. After all, it’s oil prices and interest rates. With interest rates stagnant the previous day, the delay in OPEC’s meeting has hampered further production cuts that the market was concerned about.. The argument was bolstered. As international oil prices tumbled more than 4% to $74 a barrel, the asset market began to glow. Since the FOMC in early November, the rate of increase over the past 20 days has been so fast that it has never been seen in the past. When the market throws the long-awaited gift, it reacts like this. Yes, the important point is that the mayor is eager to do something, and if you throw in a corresponding gift.. Or if you give a hint that matches it even a little bit, you’ll become too passionate. With two defenders tied up, the strikers are once again active.

This kind of atmosphere is also observed in the yen. Expectations are still strong in the market for a strong yen. It’s hard for Japan to hold out any longer.. In the end, Japan will launch an exit strategy, and as Japan’s interest rates rise, the yen will inevitably turn strong.. That’s what I think. Then should I buy the yen? Many investors are looking forward to a stronger yen. With such a strong idea, what will happen if the central bank announces the exit strategy that the market is waiting for and the intention to turn the yen strong? Isn’t the speed of the yen’s transition not the problem? Then it will take considerable back-up, such as the central bank having to change its words to reverse this. Perhaps that’s why President Ueda of Japan’s recent comments are quite touching. I’m quoting you. Read it carefully, even if it’s long.

“We cannot say with confidence that we have achieved the price target sustainably and stably yet,” Ueda said, stressing, “We will maintain the easing policy with patience.” “Strong remarks on how to change the current policy can have unintended consequences for the market,” he said. “Which part of the policy will change in what order will depend on the economy, price, and market conditions at that time.”

However, Ueda said, “If we get closer to achieving the price target, we can discuss strategies and guidelines for ending ultra-easing policies, including buying ETFs.” He said, “There are no specific plans for how to sell ETFs yet,” but added, “We will do it in a way that avoids market turmoil and causing huge losses to the BOJ balance sheet as much as possible.” In addition, Ueda pointed out that “the impact of market movements, including exchange rates, should be watched.”

Regarding YCC, he noted, “If the market’s expectations for a long-term rise in interest rates in the future increase, it may be difficult to respond to YCC fine-tuning alone.” However, he added, “The interest rate on Japan’s 10-year Treasury bond is not expected to rise sharply above the 1% upper limit, even if there is upward pressure.”

Ueda said, “I will not comment on the level of the exchange rate,” but added, “I cannot say definitively that the weak yen is negative for the Japanese economy.” “The weak yen increases domestic inflation by increasing import costs and is positive for profit-making and exports of globally operated Japanese companies,” he explained. (Yonhap Infomax, 23.11.17)

First of all, the first paragraph is key. I underlined it… Making a clear statement about how to change the current policy will have unintended consequences for the market. The yen will need to strengthen. By the way.. I’m sure you’re thinking that you want that speed to be slow. We need a gentle, stable, and controllable shift in the yen’s strength… The yen’s appreciation is progressing at an extraordinary pace in 10 days. This is not what you want. The second and third paragraphs are also unheard of for Ueda recently. If we use the exit strategy this time, it means that YCC alone may not be enough. The elimination of negative interest rates and fundamental changes in the ongoing quantitative and qualitative easing.. I’m referring to this. President Ueda himself told the story of selling the ETF he bought… I think it’s probably the first time in recent years.

If you look at the underlined part, they’re saying that they’re going to reverse the policy while minimizing the impact of the market. The size of Japanese stocks and REITs ETFs bought by the central bank is significant. If we sell it back, we can put a damper on the barely-reviving Japanese stock market. We can’t shock it, but we seem to be working on a way to reverse it with minimal impact. And the last paragraph… I’m trying to reverse the market’s expectations here.. They argue that the weak yen is not necessarily bad for Japan. It’s not out of the blue. The weak yen in the market will be quite inconvenient for Japan.. A low interest rate would be inconvenient.. So I’m going to switch to a strong yen in my exit strategy.. That’s the strong psychology. When expectations for a strong yen are strong, the Bank of Japan will be burdened to turn to that direction…. There’s nothing like that.. What’s wrong with weak yen!!!He’s giving me a chance.

As far as I can remember, the Bank of Japan is not moving toward the consensus of the market. As the market still has expectations for a strong yen… I don’t think I’ll turn to the exit right now. That’s the latest consen. Japan will implement an exit strategy in April when the Spring Tour ends next spring and the economic outlook is announced… At the beginning of this year.. He said April this year, when President Kuroda steps down, will be the starting point for a policy change.. The actual additional conversion was only possible in July this year. And in April, when President Ueda took office, he was holding his tongue. The market.. Well… It will take a considerable amount of time to change the exit strategy.. When I think about that.. I think that will make a difference then. It means that articles such as the title below are burdensome for Japan.

“Pimco, start buying yen…” ‘ BOJ ‘Expects to raise interest rates’ (Asian Economy, 23.11.21)

When will the yen turn strong…The answer to this question is.. It is time for market expectations to weaken. It’s not like there’s a set future.. I think a relative response is a more reasonable answer. Shorten your essay. Thank you.