Japan ETFs Strengthen as BOJ Reins in Loose Monetary Policy

Japan ETFs Strengthen as BOJ Reins in Loose Monetary Policy

News that BoJ officials are considering moving away from their policy to hold ten year bond yields near zero sparked the sell-off, despite a re-iteration of the BoJ intention to act in the market if the yield reaches 0.11%. The yen shrugged off the operations to continue to trade 0.5 percent higher at 110.84 against the dollar at 10:36 a.m. Tokyo.

The report said discussions were preliminary and outcomes would be dependent on updated inflation forecasts from board members.

Trump's warnings about excessive interest rate hikes also helped the gap between short and long-term Treasury yields widen.

The yield curve's flattening, or the shrinking gap between short and long yields, has been seen as a possible sign of an coming recession.

The report of the BOJ's deliberations has heightened expectations the central bank would end some of its aggressively accommodative monetary policy, which lifted the 10-year yield as much as six basis points to 0.090 percent JP10YTN=JBTC , a level not seen since early February.

Investors are bracing for a packed earnings week, including results from Google parent Alphabet, and a meeting between European Commission President Jean-Claude Juncker and Trump to discuss threatened tariffs which may affect carmakers.

"The pattern of Trump's meetings has generally been more conciliatory when he meets in person".

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The Dow Jones Industrial Average .DJI fell 13.83 points, or 0.06 percent, to 25,044.29, the S&P 500 .SPX gained 5.15 points, or 0.18 percent, to 2,806.98 and the Nasdaq Composite .IXIC added 21.68 points, or 0.28 percent, to 7,841.87. The index is down 9 percent this year and is among the worst performing European sectors.

Goldman Sachs analysts said auto tariffs, if they came to pass, would likely cause weakness in the Canadian dollar and Mexican peso, possibly also affecting the euro, pound, yen, and Korean won as investors priced in a hit to the economy.

A rally in the euro, which has been gaining from dollar weakness, fizzled out. Spot gold dropped 0.5 percent to $1,225.52 an ounce.

Crude prices recovered from a fall as concerns over production losses eclipsed worries about fuel demand.

USA crude CLcv1 settled down 0.54 percent at $67.89 per barrel and Brent LCOcv1 ticked down 0.01 percent to $73.06.

The crude oil prices have risen by 16.1% and that of electricity has grown by 3.1%, according to the local authorities. Copper CMCU3 - among the most sensitive to trade tensions - lost 0.32 percent, trading at $6,128.00 a tonne.

The dollar index.DXY, a measure of the currency against a basket of six rivals, was up 0.22 percent. Strength in the greenback has driven selling in EM stocks this year as the currency puts pressure on emerging economies with large dollar-denominated debt piles.

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