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Daiwa's View
30 January 2024
614 KB
PDF
USD/JPY hedging costs are likely to enter downtrend
USD/JPY basis tends to narrow in line with loosening of US financial conditions
Slowdown in pace of QT is expected to contribute to loosening of financial conditions
Rate hikes by BOJ would also contribute to a decline in hedging costs, but pace of Fed rate cuts is more important
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Daiwa's View
24 January 2024
715 KB
PDF
Jan MPM: BOJ presents market with positive stance
New wording added to Outlook Report that “The likelihood of realizing this outlook has continued to gradually rise”
Governor emphasized in press conference that accommodative financial conditions would be maintained
Upside for long-term rate will be limited as long as leeway for rate hikes is limited
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Politics Watch
23 January 2024
340 KB
PDF
Sudden disbanding of Kishida faction results in modest good fortune for PM Kishida
Modest benefits from sudden disbanding of Kishida faction; early mass Cabinet resignation now less likely
Candidate backed by ruling LDP wins Hachioji mayoral election in upset
Respondents in Yomiuri, Asahi Shimbun polls largely applaud disbanding of Kishida faction; declining support for Kishida’s administration temporarily stops
Drastic political fundraising/faction reforms, income growth outpacing price hikes needed to truly shore up support for current administration
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Daiwa's View
22 January 2024
455 KB
PDF
Signposts for 2024—Expected BOJ Jan meeting highlights
BOJ Jan Outlook Report forecast FY24 core CPI likely revised downward, but big move for core-core CPI unlikely
New messaging at BOJ Gov Ueda’s press conference? Wage hike effects, forward-looking statements, increased certainty for realizing 2% price stability target since last meeting?
BOJ must not miss golden opportunity!
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Politics Watch
22 January 2024
320 KB
PDF
LDP fundraising scandal could hamper break from deflation
Investigation into ruling LDP’s fundraising scandal has come to a close for now; ruling LDP avoids worst-case scenario, but summary indictment of Kishida faction’s former treasurer is noteworthy
PM Kishida focusing on overcoming deflation, especially wage hikes exceeding rising prices
Efforts to break from deflation could stall if Kishida held accountable as former head of punished faction, thus limiting his ability to push for higher wages
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Daiwa's View
19 January 2024
444 KB
PDF
Market anomalies related to US presidential elections
After presidential elections, we tend to see a rise in stock prices and the USD/JPY rate, and a decline in the Dollar Index
When former President Donald Trump won in 2016, we saw a rise in stock prices, the USD/JPY rate, and the Dollar Index
If former President Donald Trump were to win this time, the reaction may be similar to that in 2016, but US economic trends should be monitored carefully
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Daiwa's View
15 January 2024
476 KB
PDF
New development of lower volatility → lower bond yields ➢ Fed staff comments in minutes for Dec FOMC meeting suggest unusual uncertainty since pandemic may be diminishing
Lower volatility → lower yields possible this year
Could be painful development for JGB investors who were waiting for yields to rise on BOJ policy revisions
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Daiwa's View
11 January 2024
415 KB
PDF
Consensus on the Fed’s QT (Dec 2023)
MBS balance expected to continue decreasing, even after halt to reduction in UST balance
QT expected to slow in spring 2024
Consensus is optimistic for economic conditions, assuming ample liquidity remaining
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