[Mercato USA]Yen climbs sharply due to BOJ shock, temporarily in 130 yen mid-range-stock rebound-Bloomberg

On the 20th the US stock market rebounded for the first time in five working days. It was an up and down movement all day. Tech stocks continued to slide, weighed down by the Fed’s renewed hawkish stance last week.

The S&P 500 stock index rose slightly. On the other hand, the Nasdaq 100 index, which focuses on technology stocks, fell for the longest five-day streak since October. As macroeconomic factors are scarce before the end of the year, price movements tend to be large.

US treasures

US Treasuries have generally remained in negative territory. It was a move to absorb the Bank of Japan’s expansion of the allowable fluctuation range of long-term interest rates. Analysts expect US Treasuries to fall further as Japanese investors become more motivated to bring their money home.

“A tightening of BOJ policy would remove one of the last global tethers that have helped keep borrowing costs down more broadly,” Deutsche Bank analysts wrote in a note to clients. . Markets were “already volatile” after the Fed and the European Central Bank (ECB) took an aggressive stance last week, he added.

Many economists expect the Bank of Japan to raise interest rates next year. The Bank of Japan continued its unprecedented monetary easing measures for about 10 years.

Kuroda shock, BOJ review of easing is the beginning of market turmoil towards exit

Evercore ISI’s Krishna Guha and Peter Williams said in a report that high currency hedging costs mean Japanese investors are no longer net long Treasuries. He added that the BOJ’s action “has caused turmoil in global markets, but it’s not a tectonic event” and that “the BOJ’s gradual pull back from yield curve control in a manageable way we could show is possible, but it still has implications relevant to the market”.

foreign currency

In the foreign exchange market, the yen rose against the 10 major currencies. The Bank of Japan’s unexpected policy had an impact. The yen has risen sharply against the dollar since 1998, reaching 130.58 yen, an increase of 4.6%. The dollar index fell.

Yen climbs one notch higher, temporarily climbing 4.6% against the dollar to 130.58 yen – NY Foreign Exchange

“At a time when other central banks are slowing down on monetary tightening, the BOJ’s surprise move has pushed the yen stronger across the board and boosted bond yields globally,” said John Hardy, head of strategy. FX at Saxo Bank. outside. “The yen has room for further gains, but could quickly weaken unless global bond yields resume their recent decline,” he said.

Kit Jacks, chief currency strategist at Société Générale, said the yen could rise to 125 against the dollar in January as Japanese asset managers adjust to the BOJ’s more aggressive stance.

Yen Just Started Rising, BOJ Policy Adjustment To Induce Hedging – Societe G

Derek Halpenny of Mitsubishi UFJ Financial Group (MUFG) said: “The move by the BOJ provides a strong and persuasive view that the political divergence that was at the heart of the 2022 yen selling surge will reverse in 2023. It will only take to strengthen it, which will lead to a reversal of yen selling that has pushed the yen to record levels of undervaluation.” “There is a possibility that the dollar/yen will reach the 120 yen level sooner than expected.”

raw

The New York crude oil futures market continued to rally. The depreciation of the dollar and the possibility of an increase in energy demand in China, which has come out of the “zero crown” policy, were aware. Business is thin ahead of the holiday season.

A continued supply disruption in the US also supported prices. The Keystone Pipeline, which was shut down earlier this month, is targeting a full restart on the 28th or 29th, delayed by a week, people familiar with the matter said. Bad weather last week cut North Dakota production by about 300,000 barrels a day. Recovery should take some time.

TC Energy delays full restart of Keystone Pipeline until next week

‘OPEC+’, which consists of the Organization of the Petroleum Exporting Countries (OPEC) and major oil-producing countries that are not members, will have no choice but to continue to act proactively and preemptively, said the minister of Saudi Energy Abdul Aziz in a statement (SPA). He showed the market once again that he could focus solely on market fundamentals and adjust policy accordingly.

OPEC+ will continue to act aggressively and preemptively: Saudi minister

West Texas Intermediate (WTI) futures for February delivery on the New York Mercantile Exchange (NYMEX) closed at $76.23 a barrel, up 85 cents from the previous day. The January contract, which is the last day of trading, was up 90 cents to $76.09. February delivery of London ICE North Sea Brent rose 19 cents to close at $79.99.

Money

The New York gold futures market rebounded. The Bank of Japan shock pushed the dollar lower and gold higher.