The ECB, which also publishes quarterly surveys on bank lending and professional forecasters’ economic views in the coming week, is one of a dozen central banks due to set rates. The UK, Mexico and the Czech Republic are also expected to hold, while India and Poland may cut. Australia’s RBA might become the first major central bank to hike this year.“Europe has had a geopolitically turbulent start to the year, and the ECB will likely continue to focus on the forest instead of the trees. That means it will p ...

Currency Intervention and Market Dynamics - Japan has not intervened in currency markets from December 29 to January 28, relying on verbal warnings instead [1] - The yen experienced a 1.7% increase on January 23 after trading near an 18-month low against the dollar [1] - Reports of rate checks from finance officials in Tokyo and Washington suggested potential coordinated action to support the yen, although no significant outflows were observed in money market data [2] Government Stance and Financial Reserves - Finance Minister Satsuki Katayama and currency diplomat Atsushi Mimura have not commented on the rate checks, emphasizing close coordination with the U.S. on foreign exchange [3] - Japan has substantial foreign currency reserves amounting to $1.16 trillion as of December, providing the government with the capacity to intervene if necessary [4] Economic Context and Investor Sentiment - The yen's decline and rising Japanese government bond yields reflect investor concerns regarding Japan's financial situation [5] - Historical context indicates that currency intervention is often a temporary measure, with fundamental issues affecting the yen's value [5] - The upcoming snap election on February 8, where Prime Minister Sanae Takaichi seeks a mandate to reflate the economy, adds to the current volatility [5] Recent Intervention History - Japan's last significant currency market intervention occurred in 2024, costing a record 15.3 trillion yen ($99.43 billion) as monetary policies diverged between the Federal Reserve and the Bank of Japan [6]

Japan’s two-year government bond auction Friday saw demand that was stronger than the 12-month average, as relatively high yields supported investor appetite despite rising expectations that the Bank of Japan will tighten policy https://t.co/DbzODKq0pl ...

In a world of unlimited money printing and new taxes on unrealized gains, the only way to win is to own assets your government cannot print or debase. In this episode, I'm joined by Jeroen Blok, a professional investor with over 20 years of experience managing institutional wealth. Today we're unpacking his new book, The Great Rebalancing in three parts.From the systemic failure of the 6040 portfolio to the scarce asset solution involving Bitcoin and gold. We discuss why safe government debt has become a we ...

Summary of Morgan Stanley Global Macro Forum - Japan Rate Reset: Implications Across Macro Markets Company/Industry Involved - **Company**: Morgan Stanley - **Industry**: Global Macro Markets, with a focus on Japan's economic outlook and monetary policy Key Points and Arguments Japan's Economic Outlook - The Bank of Japan (BoJ) is expected to raise the policy rate in **June 2026**, with upward revisions already made as of **December 2026** [6][60] - Fiscal fundamentals in Japan are solid, but there is concern over the lack of credible and timely official fiscal estimates [60] - Real GDP growth forecasts for fiscal 2025 are revised to **+0.8% to +0.9%**, and for fiscal 2026 to **+0.8% to +1.0%** [6] Monetary Policy and Bond Market - The BoJ is likely to slow its JGB (Japanese Government Bonds) reduction pace in **June 2026** [10][60] - There is expected upward pressure on term premiums in Japan due to fiscal policy concerns and the BoJ potentially falling behind the curve [60] - The USD/JPY exchange rate is trading at a premium to fair value, influenced by Japan's fiscal and inflation outlook [19][60] Equities and Earnings - Morgan Stanley maintains a bullish stance on the Japan banking sector, with expectations of strong earnings per share (EPS) revisions [60] - The consensus 12-month forward P/E target for Japan is forecasted at **15.0x** [41][60] - Small-cap stocks have recently underperformed, but resilient fundamentals are still present [60] Asset Allocation Strategy - Morgan Stanley prefers global equities over core fixed income, favoring the US and Japan over Europe and emerging markets [46][60] - The underweight in core fixed income is primarily through credit allocation rather than government bonds, as technicals around issuance are weaker in corporate credit [60] European Market Insights - Upcoming inflation data in Europe may lead to two **25 basis point cuts** by the European Central Bank (ECB) in 2026 [24][60] - The issuance of European government bonds has been well absorbed, with improving syndicate statistics [32][60] Risk Premium and Market Dynamics - Changes in risk premium are expected to drive the next leg of USD movements, with a more USD-negative risk premium anticipated [19][60] - The correlation between the Japanese yen and the TOPIX index is becoming less negative, indicating a complex relationship between currency strength and stock performance [50][60] Other Important Content - The report emphasizes the importance of monitoring upcoming macroeconomic data and its implications for monetary policy and market dynamics [60] - Analysts express caution regarding the potential for large market moves due to shifts in risk premiums and fiscal confidence in Japan [60]

If YEN 📈If Japan starts pulling capital back home 🇯🇵What do you feel?• Higher yields• Tighter liquidity• More volatilityMarkets can sense a tide change before it’s visible.The Kobeissi Letter (@KobeissiLetter):Japanese investors are a crucial part of US markets:Japanese holdings of US bonds and stocks totaled $2.22 trillion at the end of 2024, according to Bank of Japan data.This is followed by investments in the Cayman Islands, France, and the UK at $834 billion, $179 billion, and https://t.co/D6ZMg3knrk ...

The Bank of Japan is set to hit a milestone in its quest to shrink its massive balance sheet, as its commercial paper holdings head toward zero https://t.co/kNospxoMuA ...

Core Viewpoint - Policymakers are balancing the potential growth risks from tariffs with inflation pressures in the current economic environment [1] Central Banks and Interest Rates - The Federal Reserve and several other central banks are expected to maintain current interest rates amid global economic tensions, with a focus on the implications of previous rate cuts [5][7] - The Federal Reserve is likely to hold rates steady after three consecutive cuts, allowing time to assess the impact of these reductions [7] - Central banks in Brazil, Canada, and Sweden are also anticipated to retain their current settings, reflecting a cautious approach to monetary policy [5] Global Economic Context - Kristalina Georgieva, head of the IMF, highlighted the increased vulnerability of the global economy, indicating a shift from previous stability [2] - Central banks worldwide are responding to a tense global backdrop, including market volatility in Japan and ongoing trade tensions [2][4] Inflation and Economic Data - Recent data indicates a decline in the US unemployment rate while inflation remains above the Fed's target, potentially supporting a pause in the easing cycle [8] - Upcoming economic reports, including the producer price index and consumer confidence, are expected to provide insights into inflation trends and economic momentum [9] Regional Focus - In Canada, the Bank of Canada is expected to maintain its policy rate at 2.25%, emphasizing slower growth and uncertainty related to trade agreements [10] - Australia is set to release inflation data that may influence the Reserve Bank's upcoming rate decision, with expectations of a year-over-year increase of 3.6% [12] - Japan's inflation data is also anticipated, with forecasts suggesting a slowdown to 2.2%, indicating persistent underlying price pressures [13][14] Latin America and Trade Policy - Brazil's central bank is expected to begin a multi-year easing cycle, although immediate changes are not anticipated [23] - Colombia's central bank is likely to respond to a significant minimum wage hike with a rate increase, reflecting rising inflation expectations [27] - External factors, particularly US trade policy and the review of trade agreements, are influencing the economic outlook for Latin America [26]

Core Viewpoint - The Bank of Japan's first meeting of the year is influenced by significant fluctuations in the bond market, concerns regarding government policies, and a volatile yen [1] Group 1: Market Conditions - The bond market is experiencing dramatic gyrations, indicating instability and potential risks for investors [1] - There are worries about government policies that may impact economic stability and market confidence [1] - The yen's volatility adds another layer of uncertainty, affecting trade and investment decisions [1]

Economic Growth Forecasts - The Bank of Japan (BOJ) raised its economic growth forecast for the fiscal year ending in March 2026 to 0.9% from 0.7% and for the 2026 fiscal year to 1% from 0.7% [1][2] - The central bank expects Japan's GDP to grow moderately as other countries return to growth, supported by a virtuous cycle of rising prices and wages [2] Monetary Policy - The BOJ held its key policy rate steady at 0.75% in a split 8-1 decision, after previously raising it to the highest level in 30 years in December [2][5] - There is political pressure for softer rates to stimulate economic growth, particularly from figures like Prime Minister Sanae Takaichi [5] Inflation Trends - December inflation data showed headline price growth at 2.1%, the lowest since March 2022, but still above the BOJ's 2% target for the 45th consecutive month [4] - Core-core inflation, excluding fresh food and energy prices, was reported at 2.9% in December [4] - The BOJ forecasts inflation to fall below the 2% target in the first half of the year, but underlying inflation is expected to continue rising moderately due to wage growth and persistent service prices [3][4] Future Policy Direction - BOJ Governor Kazuo Ueda indicated that the bank will continue to raise interest rates if economic and price forecasts are realized [6] - The BOJ's normalization path is expected to remain intact, albeit at a gradual pace [3][4]