Categories: General Market Commentary / Precious Metals
Topics: General Market Commentary / General Precious Metals

Global Stocks Rise After "Disappointing" BOJ Announcement: All Eyes On Janet Yellen

Global Stocks Rise After "Disappointing" BOJ Announcement: All Eyes On Janet Yellen

 

While the BOJ may have disappointed with its latest iteration of monetary policy, now known as "QQE with Curve Control", Asian and European stocks as well as U.S. equity index futures rallied in early trading perhaps on the back of the bounce in the USDJPY which has now completely faded. That said, the BOJ's "Reverse Operation Twist" which hopes to steepen the JGB curve, has provided support to global financial institutions, which are broadly higher.

For those who missed the earlier explainer, here is what happened in a nutshell: The BOJ left the -0.10% policy rate unchanged as generally expected, however the breaking news is the introduction of QQE with ‘yield curve control’. The BoJ has scrapped the average maturity targeting for JGB’s and has stated that it will buy JGB’s so ‘10y yields remain around the current level’. The statement also includes the passage that the ‘monetary base may fluctuate to achieve yield-curve control’ and that the BoJ is ‘committed to expanding the monetary base until CPI is stable above 2%’. As DB's Jim Reid effectively put it, the main takeaway to us is a tweaking of QQE rather than outright further stimulus.

And while both 10Y JGB yields and the USDJPY jumped in the initial kneejerk reaction, they have since recovered much of the earlier move, and worse - the USDJPY was trading at session lows.

Meanwhile, treasuries and the dollar were little changed before the Fed policy decision at 2pm Eastern, while oil rallied before a meeting of producers next week.

Banks and insurers led gains in equities as the BOJ refrained from moving deeper into negative interest-rate territory and shifted the focus of its stimulus to controlling the yield curve, Bloomberg reports.

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