The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
BLOOMBERG
The yen slumped and global bond yields slid after the Bank of Japan (BOJ) signalled it’s in no hurry to remove negative interest rates. Japan’s currency fell as much as 1.3% to a one-week low against the dollar, while the Nikkei 225 equity index rallied to a two-week high, after the BOJ held rates at -0.10%. Treasury 10-year yields slipped about two basis points, while the German 10-year dropped five basis points as yields across the euro area fell.
In equity markets, Europe’s Stoxx 600 equity index gained 0.3% while US futures were little changed after the Nasdaq 100 hit a record high for the second consecutive session.
Investors noted Japanese policymakers had not unveiled any groundwork to move away from sub-zero rates, while BOJ governor Kazuo Ueda had pushed back against expectations on policy tightening as soon as January.
“The BOJ stance encouraged speculators to sell the yen, and there’s relief that yields in Japan aren’t likely to to to jump higher,” said Lee Hardman, a strategist at MUFG Bank Ltd. “That takes some of downside risk away for other major global bond markets as well.” The BOJ meeting follows an apparently dovish pivot from the US Federal Reserve, and signs that most developed-market central banks are on the road to cutting interest rates from next year.
As rate-cut bets have mounted, several policymakers in Europe and the US have tried to push back against rate-cut wagers. Chicago Fed President Austan Goolsbee and the Cleveland Fed’s Loretta Mester suggested, the expectations were premature. While Treasury markets paused after the Fed officials’ comments, Hardman said “ultimately the market is looking through those comments because they only really have credibility if the data backs them up.” Whether equities and bonds continue their rallies might be determined by near-term data readouts including durable goods orders, personal consumption expenditures — the Fed’s preferred measure of inflation — and the final third quarter gross domestic product estimate.
European equity gains were led by rate-sensitive real estate and technology stocks. UBS Group AG advanced after Cevian Capital AB took a €1.2 billion ($1.3 billion) stake. In US premarket trade, crypto stocks rallied as Bitcoin extended gains, bringing its year-to-date advance to 160%. Elsewhere, oil held near its highest close in two weeks as more companies shun the Red Sea after a spike in vessel attacks along the key shipping conduit.