TOE Alert: Financial Market Mayhem

posted by Richard Katz on February 09, 2016

Found in Japan, categorized in Finance, Banking, and Regulation

Tags: Richard Katz TOE Japan economy Kuroda stock market

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While it would be easy to blame the unintended consequences of Kuroda’s negative interest rate gambit for yesterday’s 900-point crash, the fact of the matter is that the Nikkei 225 is moving in tandem with the ups and downs of markets in New York, London


Key points for Richard Katz's TOE Alert include:
- Stock prices fell 5% on Tuesday and another 2.4% Wednesday morning to the lowest level since Kuroda’s “monetary bazooka” of October 2014;
- The yen stands at ¥114.6/$, the strongest level since October 2014;
- Yields on JGBs out to ten-year maturity are now in negative territory, for the first time;
- Banks, pension funds, insurers all invest heavily in JGBs; 
- Banks have already made big cuts in the rates they pay depositors, but are not expected to go into negative territory for households or SMEs;
- All this means a squeeze on earnings at banks, insurers and pension funds

About Richard Katz

Richard Katz

Richard Katz is Editor of The Oriental Economist Report, a monthly newsletter on Japan, as well as the semi-weekly TOE Alert e-mail service on Japan, and is also a special correspondent at Weekly Toyo Keizai, a leading Japanese business weekly.

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