In the financial and securities markets on the 24th, bond prices fell sharply, and long-term interest rates soared to the 0.7% range for the first time in a month. After the Bank of Japan announced that the “certainty” of achieving the 2% inflation target was “gradually increasing”, expectations for an early end to the negative interest rate policy grew stronger. In the foreign exchange market, the yen appreciated, and in the Japanese stock market, stock indexes continued to decline.
Bank of Japan Governor Ueda holds a press conference (23rd)
Photographer: Kiyoshi Ota/Bloomberg
At a press conference after the monetary policy meeting held on the afternoon of the 23rd, Bank of Japan Governor Kazuo Ueda said that the probability that the underlying inflation rate would gradually increase toward the 2% target was “gradually increasing.” comment. He also acknowledged that, given the current outlook for prices, the economy, and finances, “policy operations that would result in major discontinuities can be avoided.”
bond
Bond prices have fallen sharply. Yields on 10-year, 20-year, and 30-year bonds rose significantly by more than 10 basis points (bp, 1 bp = 0.01%) from the previous day. The yield on newly issued 10-year bonds rose to 0.74%, the highest level since December of last year.
Makoto Suzuki, senior fixed income strategist at Okasan Securities, pointed out that the 10-year interest rate in the 0.5% or 0.6% range was too low and abnormal, assuming the Bank of Japan’s policy revisions. He said, “It may have been supported by purchases by overseas investors, but if there is a policy correction, it would not be strange for interest rates to rise further.If they settle at the 0.7% level, they could rise to around 0.8%.” ” he said.
- March long-term government bond futures temporarily fell by 1.07 yen from the previous day to 145.92 yen.
- The yield on newly issued 10-year bonds is 9.5 basis points higher at 0.73%.
- The yield on newly issued 30-year bonds rose 13 basis points to 1.86%, the highest level since November last year.
money order
The yen exchange rate on the Tokyo foreign exchange market rose to the high 147 yen level against the dollar. Amid growing expectations that the Bank of Japan will end negative interest rates in March or April, yen buying has intensified as yen interest rates have risen.
Hiroyuki Machida, director of the Foreign Exchange and Commodity Sales Department at Australia and New Zealand Bank, said that while yen interest rates were rising, the dollar was expected to fall in the 148 yen range from the previous day’s rise in U.S. interest rates, which had uncertain causes, and the accompanying rise in yen interest rates. “Yen buybacks tend to prevail because it looks expensive and it feels affordable,” he said.
- As of 1:02 p.m., the yen was trading at 147.84 yen against the dollar, up 0.3% from the previous day.The low price so far was 148.40 yen, and it rose to 147.76 yen at one point.
stock
The Tokyo stock market fell. The Nikkei Stock Average at one point fell by more than 1%. The momentum of the yen’s depreciation has slowed, and selling has spread, especially in export-related stocks such as automobiles and machinery. Growth stocks such as electrical machinery and precision equipment, which have become increasingly expensive as interest rates rise, and real estate are cheap. On the other hand, bank stocks, which benefit from the rise in interest rates, are rising noticeably.
- The Tokyo Stock Price Index (TOPIX) was down 0.6% from the previous day to 2,527.11 – as of 1:05 p.m.
- Nikkei Stock Average fell 0.9% to 36,172 yen.46
Tetsuo Seshita, multi-manager investment manager at Saison Investment Trust, said, “Bank of Japan Governor Ueda has indicated that progress is being made towards lifting negative interest rates, so basically we are starting to see a story in which interest rates will rise.” I said.
On the other hand, bank stocks rose sharply on the view that rising interest rates would provide a tailwind to the earnings environment, and the TSE’s 33-industry banking index rose for the first time since October last year. Mr. Seshita points out, “Monetary tightening is basically a negative force for the stock market, but a positive force for banks.”
Bank stocks and industry indexes, which factor in the hawkish Bank of Japan, are at their highest intraday rate of increase since October last year.
2024-01-24 04:35:15
#Japanese #Market #ConditionsLongterm #interest #rates #soar #expectations #Bank #Japan #revisions #strengthen #yen #appreciation #stock #decline #accelerating