Short comment
Unlike many analysts expected last year, looks like Bank of Japan won't stop QE. Rather, it can't. Global macroeconomic situation is going down and US Fed and Chinese PBC changed their stance already. In this point, even European ECB could delay its planned rise of regional policy rate which is supposed to happen this summer. Some players are suggesting possible restart of buying regional bonds by the European instiution.
Unlike many analysts expected last year, looks like Bank of Japan won't stop QE. Rather, it can't. Global macroeconomic situation is going down and US Fed and Chinese PBC changed their stance already. In this point, even European ECB could delay its planned rise of regional policy rate which is supposed to happen this summer. Some players are suggesting possible restart of buying regional bonds by the European instiution.
The sluggish global real economy is making the BOJ to continue the QE. In last regular meeting, the institution lowered its expectation for the price, so kept its policy rate at -0.1%. The QE by the BOJ will be continued for a while, but it could be bad news for regional financial markets. If the market interest rates in positive range, at least 1% in 10 year government bond, it can be the best news for overall financial markets. Dramatic down of the market rates could give boost to safe assets in the region.
However, with the negative market rates, regional fixed income market will be in pretty static range for a while. The static state of the market is bad news for regional stock market too. NIKKEI225 had been sluggish during last month compared with S&P500, Hangseng and even EUROSTOXX50. The movement had been too sluggish cobsidering Japanese manufactures could be one of the biggest benefited parties from smoothing trade war between the US and China.
Planned rise of consumption tax could give impact more or less, but the rise is old news. I think the main reason is that the depleted FI market had lowered expectation for the stock market. The lower volatility in the financial markets means not only lower downside but also lower upside. The market interest rate of US, was high enough during last month, In 10year T-Note, the yield had been between 2.6 and 2.8% and the volatile movement was proceeding in the market. S&P500 had risen by 7% during the month. The depleted volatility is hurting the stock market.
However, with the negative market rates, regional fixed income market will be in pretty static range for a while. The static state of the market is bad news for regional stock market too. NIKKEI225 had been sluggish during last month compared with S&P500, Hangseng and even EUROSTOXX50. The movement had been too sluggish cobsidering Japanese manufactures could be one of the biggest benefited parties from smoothing trade war between the US and China.
Planned rise of consumption tax could give impact more or less, but the rise is old news. I think the main reason is that the depleted FI market had lowered expectation for the stock market. The lower volatility in the financial markets means not only lower downside but also lower upside. The market interest rate of US, was high enough during last month, In 10year T-Note, the yield had been between 2.6 and 2.8% and the volatile movement was proceeding in the market. S&P500 had risen by 7% during the month. The depleted volatility is hurting the stock market.