From Marc to Market, February 10:
(I am on a business trip and did not intend to post any analysis today. However, there have been a number of unexpected developments that warrant some commentary. Thanks for bearing with me.)
Japanese press reports that the BOJ Deputy Governor Amamiya turned down the opportunity to become the next BOJ governor. Instead, next week, former BOJ board member Kazuo Ueda will be nominated. The market reacted dramatically, taking the yen sharply higher and sold JGBS. Japanese stocks eked out small gains, while the other large Asia Pacific equity markets sold-off. The dollar initially fell to about JPY129.80 from around JPY131.55. It subsequently recovered and is back above JPY131.00. There will be two new deputies as well: Uchida, the BOJ’s executive director in charge of monetary policy and Himino, former top regulator. My guess is that Ueda, who wrote an article last year against premature raising rates, coupled with what I expect to be the easing of price pressures will see greater continuity of BOJ policy. I expect yield curve control to persist. Japan is the last with a negative policy rate, and this could continue into 2024.
China reported a rise in CPI to 2.1% from 1.8% in December. This was in line with expectations. Food prices accelerated to 6.2% from 4.8%. The core measure, excluding food and energy edged up to 1% from 0.7%. This is the highest since last June. Producer prices were 0.8% lower than a year ago, from -0.7% in December. The median forecast in Bloomberg’s survey was for -0.5%. Separately, China reported a larger than expected jump in lending. The CNY5.98 trillion was driven by banks (CNY4.9 trillion vs. CNY1.398 trillion in December and expectations for CNY4.2 trillion). The dollar rose to CNY6.8080 earlier today, the highest since January 9....
....MUCH MORE
