Japan Sets The Table
It's Future Course Aligns With Higher Rates
It’s a big, big day out there today. Japan held rates at zero and Ueda had a few words for the “public” outside of the “closed” financial system known to operate in his Asian country. In this post I’ll summarize that but in reality it’s my article that follows where I dig into the “trades” and “patterns” I live by, “candles and wicks and spikes” oh my. With that in mind let’s document what’s happening in Japan then get ready to learn.
Japan Holds Rates Overnight
Here’s a quick summary. BOJ keeps ultra-low interest rates unchanged; BOJ makes no change to dovish policy guidance; Ueda briefed media on its decision; and will signal a near-term end to negative rates.
Japan’s seen inflation hold above 2% for over a year now and many firms are signaling a readiness to raise its wages, increasing the opportunity of a “near-term” policy shift. "We expect the BOJ to ditch negative rates policy and yield curve control altogether in January, when fresh quarterly projections become available," said Naomi Muguruma, chief market economist at Mitsubishi UFJ Morgan Stanley Securities.
Raising rates at a time other central banks are cutting them could trigger a spike in the yen that would hurt big manufacturers' profits and discourage them from hiking wages, some analysts say. That’s the “by line” prevailing. Let’s see what Ueda said.
What Ueda Said
Following are a few paraphrased excerpts from Kazuo Ueda's comments at his news conference earlier today.
Labor conditions are tightening and corporate profits are increasing.
Labor unions are demanding wage hikes exceeding those of 2023.
Some smaller firms are struggling to pass on higher costs.
The cost-driven inflation appears to be finally peaking.
The prospects for achieving our price target are gradually heightening.
Data between now and Japan’s meeting in January is essential.
It was an important conference to listen to and one, since I am a firm believer that the Yen is heading back to more traditional lower levels against the Dollar, was essential.
That’s a summary for those of you who wanted to “sleep in” today. I didn’t and wanted to be sure of what I heard. Over the next couple hours I’m putting together a rarity, a second “The Ticker” article that teaches what just happened in a couple futures based on the “world” turning and how I do trade these moves. So read and digest this one as there’s more coming later today when the market closes.
I’m coming right back at you with Journey and the “Wheel In The Sky” as it describes exactly what’s happening. In the next article I’ll post a lesson, an important “teaching” one you should all incorporate into your “short term” trading that offers a significant benefit to “long term” aspirations as well. Without further ado I’m off to writing it so that everyone learns from contemporaneous activity before it’s too late.