Well, the big news tonight was what Japan would be. Here’s the skinny from our friends at ZH:
Disappointment on rates (no change)
- *BOJ MAINTAINS POLICY BALANCE RATE AT -0.100%
But it appears BoJ unleashes its reverse twist idea…
- *BANK OF JAPAN TAKES ADDITIONAL ACTION
- *BOJ TO INTRODUCE QQE WITH YIELD CURVE CONTROL
- *BOJ SCRAPS AVG MATURITY TARGET OF JGB HOLDINGS
- *BOJ TO BUY JGBS IN LINE WITH CURRENT PACE (disappointing)
And ups it ETF-buying…
- *BOJ: 2.7T YEN OF ETF BUYS FOR ETFS THAT TRACK TOPIX
Will do more jawboning…
- *BOJ TO ENHANCE FOWARD GUIDANCE
- *BOJ TO EXPAND MONETARY BASE UNTIL INFLATION STABLE ABOVE 2%
- *BOJ BOARD VOTES 7-2 ON GUIDELINES FOR MARKET OPERATIONS
So the bottom line is – bigger ETF buying, maintains rates (no easing), maintains bond-buying (no easing), unveils “yield curve control” (steepens curve but crushes bank balance sheets through long bond MTM losses)
But then they dropped the final tape-bomb…
- *BOJ: MONETARY BASE MAY FLUCTUATE TO ACHIEVE YIELD-CURVE CONTROL
In other words – QQE size may increase… which the market liked…
Looking at the USD/JPY chart, it’s roaring higher, but at first the floor fell out (same goes for the ES) so whoever had stops in place……….sayonara!
