Credit Writedowns » Japan

Tuesday’s Surprises from Australia and Japan

BBH — Tue, 07 Feb 2012 12:30:27 +0000

The dollar is mixed against the majors and EMs but largely remains confined to recent ranges. The EuroStoxx 600 slid for a second straight day, currently down 0.5%; MSCI Asia index holds recent highs. Demand in Greek bill sale eased slightly and refinancing costs moved higher; Portugal’s 10-year up 22bp

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Dollar Heading Lower after Constructive Outcome of EU Summit

BBH — Tue, 31 Jan 2012 12:30:06 +0000

Dollar is heading lower after the EU summit saw 25 of the 27 nations endorse the new fiscal compact. EuroStoxx 600 is nearly 1% higher as a result, banks up nearly 1.3%; MSCI Asia Pacific index up 0.7%. Japanese data showed a surge in December production; Germany’s Dec. job boost offset by retail sales

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Seven Observations about Commitment of Traders in FX

Marc Chandler — Mon, 23 Jan 2012 14:00:00 +0000

The Commodity Futures Trading Commission requires futures traders to identify whether they have an underlying business interest (commercials) or if they don't (non-commercials). Here are seven take-aways from the most recent report that covered the week through January 17th

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Chart of the Day: Developed economies’ debt levels by sector

Edward Harrison — Fri, 20 Jan 2012 14:00:41 +0000

This is a great chart below via the Wall Street Journal. It shows the total debt to GDP ratios for the largest developed economies in the world broken down into four sectors: households, non-financial corporations, financial institutions and government

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What has the Fed done to avoid the US becoming the next Japan?

Guest Author — Mon, 09 Jan 2012 14:15:00 +0000

Imagine being on the FOMC and in the mainstream paradigm. In 2008 you moved quickly to make sure the US would not become the next Japan. What do you have to show for it, 3 years later

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Dollar Finishing Year Mixed, Second Annual Gain Against Euro

Marc Chandler — Fri, 30 Dec 2011 13:22:24 +0000

The main price action to note is that the euro fell through the JPY100 level for the first time since mid-2001. For the most part, the dollar is confined to yesterday's ranges against the major currencies. The day's economic highlights include: HSBC's Chinese PMI, Hungary'scontroversial law that further erodes the central bank's independence, South Korea's CPI and the new PBoC currency fix of

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Japan and China: Small Beer

Marc Chandler — Tue, 27 Dec 2011 02:47:51 +0000

Understanding the financial agreement within the context of that rivalry is more important than what it means for the future of the dollar as the world's more important reserve currency, invoicing currency and vehicle currency. Nor will the agreement impact the outlook for either the yuan or the yen

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Bond vigilantes and the currency relief valve

Edward Harrison — Wed, 21 Dec 2011 15:49:20 +0000

The last post by Randall Wray below is an interesting one because it points out how the world has changed since the end of the gold standard and why the sovereign debt crisis is centered in the euro zone. While I have an Austrian bias overall, for me, MMT is the best way to think about nonconvertible floating exchange rate systems as distinct from fixed exchange rate, currency board, pegged and convertible systems. The difference is policy space and what I would call the bond vigilante relief valve

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Is Finland Really A Closet Member Of The Eurozone Periphery?

Edward Hugh — Mon, 19 Dec 2011 02:36:20 +0000

The country’s debt dynamics are far from unsustainable at this point, but given the weakening in the country’s export performance and the steady unwinding of the housing boom we can now anticipate I would expect growth to be weaker than either the EU or the IMF are currently anticipating, and pressure on the country to increase fiscal spending to maintain expectations to rise, with the implication that pressure on the Finnish spread over 10 year German bunds will continue, as the country risks drifting off from being part of the core towards the growing periphery, at least in the eyes of investors

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Pending EU Summit May Curb Response to ECB

BBH — Thu, 08 Dec 2011 12:45:00 +0000

The dollar is trading slightly firmer ahead of today’s ECB rate decision and tomorrow’s summit. We expect the ECB to cut by 25bps, with a possibility of a 50bps cut; look to fade knee-jerk reaction. Australia’s employment much weaker than expected; Singapore imposes news taxes on homes

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Full Text: FRB Statement on Coordinated Central Bank Action on Currency Swaps

Edward Harrison — Wed, 30 Nov 2011 22:15:16 +0000

"The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system. The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity. "

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Chart of the day: Definitive guide to the European debt web

Edward Harrison — Fri, 18 Nov 2011 13:08:15 +0000

The BBC has a terrific chart tool that gives you a good feel for exactly how much the sovereign debtors in each of the European countries owes and to which other countries. The great thing about this chart is that it also shows you the debt flows outside of the European periphery i.e. for France and Germany, as well as for Japan, the US and Britain in both directions

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News Links: Japan’s Hidden Jobless

Edward Harrison — Thu, 17 Nov 2011 14:30:53 +0000

2011/11/16 00:43 – Japan’s Hidden Jobless Hits 4.69mn, Worse Than After Lehman Shock The number of Japanese that want to work but are not actively seeking employment has surpassed levels from after the global financial crisis erupted, according to government data released on Tuesday. Some people have given up searching for work because they believe

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Why the Yen is Strong

Marc Chandler — Thu, 17 Nov 2011 02:15:06 +0000

The yen and the Swiss franc were seen as safe haven currencies during the tumultuous crisis in Europe. The Swiss National Bank has effectively and apparently cheaply took the franc out of the game. This may have increased some speculative pressure toward the yen. Yet dismissing the yen's strength as speculative in nature makes analysis superfluous. It misses the underlying imbalance that the yen's strength reflects

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Key data to focus on in the week ahead

Marc Chandler — Mon, 14 Nov 2011 14:20:51 +0000

Economic data has been of tertiary concern to the market recently, overwhelmed by the drama in Europe. Given that the drama may die down, with new governments in Greece and Italy, the economic data may become somewhat more important

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New Governments, Same Problems

BBH — Mon, 14 Nov 2011 12:30:00 +0000

Markets failed to get a lasting boost from change in EZ governments; dollar broadly higher into open. Italy auction met with decent response, but higher yields nonetheless ; change in governments no panacea in EZ. Japan’s preliminary Q3 marks the end of the recession; Hungarian forint weakest currency on the day

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Thai Floods and Yen Appreciation

Marc Chandler — Tue, 08 Nov 2011 16:49:23 +0000

Given the poor track record of intervention, unilateral or multilateral, sterilized or unsterilized, there may be no compelling need to understand why the $100 bln intervention is not sticking. All sorts of possible explanations seem partly at play. Intervention has not been repeated. The failure to push the greenback above JPY80 lent bullish yen safe haven views intact. Spot intervention is less effective than repeated operations in the swaps and options market too, as the SNB is thought to have done. In any event, another force may be at work and that is the floods in Thailand. They have hit the Japanese auto sector hard as Thailand is an important production base. Other industries have also been hit as reports by Hitachi and Canon indicate

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The BoJ’s Intervention Treat

BBH — Mon, 31 Oct 2011 11:30:00 +0000

Risk aversion is taking hold again with global stocks broadly lower; dollar firmer against majors. Price action dominated in part by BoJ intervention; on the data front Chicago PMI and Canadian GDP. Norway’s central bank indicated it will add to foreign currency to oil fund; Korean IP focus in EMs

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Quantitative Easing!!!

Guest Author — Thu, 27 Oct 2011 14:46:29 +0000

The BoJ announced today that it will expand its asset purchase programme by JPY5trn (USD66bn), with all the purchases being directed at JGB's. Add that to the GBP75bn (USD120bn) by the BoE, CHF50bn (USD57bn) by the SNB and the EUR341bn (USD477bn) expansion of the ECB balance sheet since the end of June, and it collectively adds up to USD720bn. Clearly this explains the market rally from the low

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Gold Breaks Out — Print Away!

Global Macro Monitor — Tue, 25 Oct 2011 23:47:47 +0000

Gold is up big today and trading like the monetary printing presses are ready to kick into overdrive. We believe the recent Fed speak about QE3, possible BofJ intervention to weaken the yen, and growing expectations that tomorrow’s announcement by by the EU may fall short and force the ECB to monetize bond purchases are contributing to the move. In addition, given the recent PMI data out of Europe, the ECB may be forced to ease sooner rather than later and even hearing hints and rumors floating around the ether of China easing

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Fed Outgunned, EMU Outflanked

Claus Vistesen — Sun, 23 Oct 2011 18:00:07 +0000

The auxiliary objective of QE by the Fed is to weaken the USD. Herein lies the rub. Quite simply, with the recent announcement by the BOE of another round of QE worth £75 billion, with the ECB now willingly or unwillingly being forced into increased support of peripheral debt markets and with the BOJ also pledging more stimulus, the Fed is starting to look like the conservative central bank in the G4. Even if Merkel and Sarkozy, and rightly so, appear most concerned with putting pressure on Italy, the most significant issue remains Greece which is now in default a fact that was un-sanctimoniously confirmed by the leaked bailout document which has the Troika admitting that the medicine they were mandated to administer would only make the patient worse and not better

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Japan: Yen upside risk on deflation threat

Marc Chandler — Thu, 29 Sep 2011 14:30:35 +0000

More broadly, the recovery from the March tragedy appears to be running out of steam. Retail sales which surged in the April-June period fell in both July and August and deflation appears to be threatening again. The year-over-year pace of national CPI is expected to slip back to 0.1% in August, when reported in early Tokyo on Friday. The Sept readings for Tokyo are expected to be -0.2% year-over-year

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IMPORTANT: Long-term interest rates are a series of future short-term rates

Edward Harrison — Mon, 26 Sep 2011 12:53:52 +0000

On how the expectations theory of interest rates explains why debt-induced depressions are fundamentally deflationary in nature

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Holders of Sovereign Debt

Global Macro Monitor — Wed, 21 Sep 2011 03:00:28 +0000

Here’s a great chart just released by the International Monetary Fund for Greece, Portugal, and Ireland as well as Japan, the US and the UK. Note that almost half of the US federal government debt is held by the Federal Reserve and the government itself, such as the Social Security trust fund. Add to that the 22 percent foreign official holdings (mainly central banks) and almost 70 percent of the debt of the U.S. government is held by non-market/non-profit oriented investors

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Chinese shunning trade with French banks

Edward Harrison — Tue, 20 Sep 2011 14:42:11 +0000

Reuters has reported that Bank of China, a dealer in China's foreign exchange market, has stopped doing foreign exchange forwards and swaps with several European banks. Separately, sources say the European banks involved are Societe General, Credit Agricole, and BNP Paribas, the three banks being frozen out of the US money markets. Allegedly, the bank has also stopped trading with UBS because of worries about UBS's rogue trading losses

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Is the US Becoming Japan?

Global Macro Monitor — Tue, 13 Sep 2011 15:27:00 +0000

As Treasury bond yields tumble to record lows we’re hearing lots of talk the U.S. is following the economic trajectory of Japan. Not so fast! Take a look at the following chart

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Big in Japan

Michael Pettis — Mon, 12 Sep 2011 13:30:00 +0000

As I see it, Japan’s problem was that during the 1980s it was so addicted to investment-led growth and artificially cheap financing that it misallocated capital on a massive scale and failed to include the resulting implicit losses in its GDP calculations. If you look at real per capita household income and household consumption growth during the period of Japan’s stagnation, you will find that both of them rose fairly rapidly. This isn’t what typically happens during a US-style financial crisis, when household income suffers

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After Ben, Markets Brace for US Payrolls

Marc Chandler — Thu, 25 Aug 2011 17:00:01 +0000

The impact of Fed Chairman Bernanke’s testimony – his assessment of the economy and the further accommodation that can be provided to stem economic stresses into next week - will dominate market action into the next week. The G10 currency complex has been highly sensitive to the global risk environment. The potential to break outside recent ranges is down to the policy responses to the crisis together with the continued evolution of the growth figures with elevated volatility levels indicating the markets are preparing for further disruption ahead

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Jobs and deficit crisis will lead to double dip and more downgrades

Edward Harrison — Wed, 24 Aug 2011 09:30:44 +0000

Former Fed nominee and Nobel Laureate Peter Diamond spoke to Bloomberg News about how he sees the economic difficulties the United States faces. His view is that America faces a jobs crisis in the here and now and that deficit reduction is a longer-term problem

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The yen is a safe haven as Japan is the world’s largest creditor

Marc Chandler — Fri, 19 Aug 2011 14:00:00 +0000

The yen is a safe haven. That assertion seems so obvious, that why it is the case is rarely explored. It does not seem to be a function, as some suggest, of its trade surplus, but rather its position as a net international investment surplus country. That means that Japanese investors own more foreign assets than foreign investors own of Japanese assets. In fact, Japan is the world's largest creditor. Last year, it was in surplus by over $3 trillion. China is the world's second largest creditor at about $2.2 trillion and Germany is in third place with a $1.2 trillion surplus. Next are Saudi Arabia and Switzerland

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US real 10 year yields at record 225bpt discount to JGBs

Edward Harrison — Thu, 18 Aug 2011 13:15:00 +0000

PIMCO, the world’ largest bond fund call this suppression of yields financial repression because it means savers and bond investors get negative real returns. However, John Hempton pointed out that in Japan, where this monetary policy is well-advanced, deflation has set in and real yields are positive despite the zero-rate interest policy (ZIRP)

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Notes from a Private Briefing with the Bank of Japan

Marc Chandler — Thu, 21 Jul 2011 18:00:00 +0000

The Bank of Japan held a private briefing with a small group of analysts from leading financial institutions in their NY rep office. The Director-General of the Research and Statistics Department led the presentation. This column summarises insights from that meeting

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Mrs Watanabe has amassed a large short yen position

Marc Chandler — Tue, 19 Jul 2011 13:27:48 +0000

Something interesting is being played out. Margin traders--the famed Mrs Watanabe-- at the Tokyo Futures Exchange--have amassed a large short yen position. There are about 900k short yen contracts as of today and about 364k are short yen against the dollar. This is the largest short yen long dollar positions since

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Mrs Watanabe has amassed a large short yen position originally appeared on Credit Writedowns

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How to Think about Currency Intervention Risks

Marc Chandler — Thu, 14 Jul 2011 14:00:27 +0000

Officials from Japan and Switzerland have stepped up their rhetoric protesting the price action that has propelled their respective currencies sharply higher. Contrary to market anxiety the risk of intervention remains low and lower for the SNB than the

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“Don’t listen to Hugh Hendry. He’s a loser.”

Edward Harrison — Sun, 03 Jul 2011 00:54:52 +0000

Below is a nice little interview with Hedge Fund manager Hugh Hendry . The headline quote was his way of showing us he doesn’t take himself too seriously. But his underlying message is that he believes it pays to really massage the most contentious issues and take a view on those. If you do have a contrarian view, it will be backed by more rigorous analysis such that you can be better assured of a decent return in down markets. Right now, one of his most contrarian bets is Japan

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“Don’t listen to Hugh Hendry. He’s a loser.” originally appeared on Credit Writedowns

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