As we expected, the BoJ left QQE largely unchanged. Rates are unchanged, except for a yield curve twist that could marginally steepen the curve. The amount of money being thrown at stocks/bonds remains unchanged except that the TOPIX will be emphasized over the Nikkei 225 (at least until they own most of the TOPIX too.)
From our base case in yesterday’s post What to Expect:
The BoJ and FOMC both stand pat, with the BoJ possibly increasing equity purchases (but shifting to TOPIX from NKD) and the FOMC pounding the table on a December rate hike to help prop up the USD. EURUSD will drop through its SMA200 and CL will rally strongly enough to keep stocks on the rise… USDJPY will sell off initially, reaching 100.50 or 100.08…
Things went pretty much as planned. Oil and NKD spasmed higher. The EURUSD plunged below its SMA200. And, after the initial self-congratulatory spike, USDJPY nailed our next downside target — though it really took some patience (and, nerves!) to see it through.
Next, we’ll find out if the FOMC can be as accommodating (pun intended.)
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