The Nikkei 225 fell more than 2% after the Bank of Japan widened its yield target range, while the yen strengthened

The Nikkei 225 fell more than 2% after the Bank of Japan widened its yield target range, while the yen strengthened
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The Bank of Japan announces unplanned bond-buying operations

The Bank of Japan has offered to buy 600 billion yen worth of Japanese government bonds for a period of 1 to 3 years.

The central bank earlier said it would increase outright purchases of JGBs to about 9 trillion yen a month from January to March — up from the previously planned 7.3 trillion yen.

The 10-year JGB yield earlier rose 20.5 basis points to 0.455%, the highest since 2015.

– Jihye Lee

The head of the Central Bank of Japan said that the bank will not hesitate to further ease the monetary policy

Bank of Japan Governor Haruhiko Kuroda said at a press briefing that the central bank would not hesitate to ease monetary policy further as the economy faces many uncertainties.

He added that it was too early to discuss an exit from the current policy and that exit strategies should be discussed at policy meetings if the economy approaches the central bank’s 2% inflation target.

– Jihye Lee

Bank of Japan keeps interest rates steady, yield curve widens control band

The Bank of Japan has kept benchmark interest rates steady and announced it will shift the control zone of the yield curve, the Bank of Japan said in a statement.

The BOJ said it would widen the range of yield fluctuations on Japan’s 10-year government bonds to plus and minus 0.5 percentage points from the current plus and minus 0.25 percentage points.

The adjustment is intended to “enhance market performance and promote a smoother formation of the entire yield curve while maintaining favorable financial conditions,” the BOJ said.

The Japanese yen strengthened more than 2% to 133.37 against the US dollar following the announcement.

– Jihye Lee

The minutes of the Reserve Bank of Australia considered a range of options in December

Minutes from the Reserve Bank of AustraliaThe December meeting showed that the central bank considered a number of options for the cash rate decision, including a complete pause in hikes.

“The Board considered several options for a cash rate decision at its December meeting: a 50 basis point increase; a 25 basis point increase; or no change in the cash rate” minute he said.

RBA board members also stressed the need to “act consistently”, adding that the central bank would continue to consider a range of options for next year.

– Jihye Lee

China keeps key lending rates unchanged

The People’s Bank of China kept the one-year and five-year lending rates unchanged in December.

The central bank kept the one-year lending rate at 3.65% and the five-year lending rate at 4.30%, in line with expectations in a Reuters poll.

The offshore and onshore Chinese yuan were relatively steady at 6.9808 and 6.9783 against the US dollar, respectively.

– Jihye Lee

CNBC Pro: China poised for revival in 2023? Wall Street experts weigh in – and explain how to trade

What’s next for China after rolling back a number of Covid-19 measures?

Those in favor of the market focus on the prospect of a recovery in the world’s second-largest economy, opening up opportunities for investors.

CNBC Pro subscribers can read more here.

– Xavier Ong

The Bank of Japan is expected to keep its interest rate steady

It is the Bank of Japan is expected to hold Its interest rates remained steady at -0.10%, according to a Reuters poll of economists.

The rate decision is expected after the central bank’s two-day monetary policy session ends on Tuesday.

Separately, the Japanese government and BOJ reportedly aim to revise the statement on the 2% inflation target at the earliest possible date. Kyodo newsciting sources in the government.

Jihye Lee

Evercore ISI says the Fed is overestimating rate hikes

Evercore ISI’s Ed Hyman wrote in a note on Sunday that the Federal Reserve is raising interest rates too much to control inflation and could eventually push the US economy into recession.

Hyman writes that the Federal Funds rate is 6.5% versus core PCE of 4.7% for the year and bond yields are 3.5%.

“And it’s not just the Fed tightening: the ECB, BoE, Mexico, Switzerland and Norway also tightened last week,” he said. “Perhaps more deeply, the money supply is shrinking.”

In addition, Evercore’s economic spillover index is nearing recession territory, along with other indicators such as company surveys, inflation data and layoff announcements. And wage increases have begun to slow and high rents are showing the first signs of easing, suggesting that inflation is running its course.

“After all, 87 percent of American voters are worried about a recession,” Hyman said.

– Carmen Reinicke

The S&P 500 is headed for its worst December in four years

The S&P 500 has fallen more than 6% this month as Wall Street struggles toward the end of the year. That takes it to its worst monthly performance since September. It would also be the biggest December decline since 2018, when it fell 9.18%.

Shares closed lower for the fourth day in a row

Recession fears and dashed hopes for a year-end rally weighed on stocks on Monday, sending them to a fourth straight negative close.

The Dow Jones Industrial Average closed down 163.85 points, or 0.50%, at 32,756.61. The S&P 500 fell 0.91% to 3,817.47 and the Nasdaq Composite fell 1.49% to 10,546.03, while Amazon shares fell 3%.

– Carmen Reinicke

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