The last time Jack Farley had Tokyo-based, global macro markets trader and Bank of Japan aficionado Weston Nakamura on Forward Guidance - the BOJ had shocked the world with a sudden unexpected major change in their Yield Curve Control policy.
At the January Monetary Policy Meeting held today, the BOJ once again shocked markets and caused mayhem in bond and FX markets - but this time, by doing nothing. Despite the unprecedented scale of record-setting JGB buying (or, foreign and domestic investor selling pressure), the Bank of Japan delivered a unanimous vote of no change in Yield Curve Control policy for Governor Kuroda's second to last meeting of his historic, and dramatically controversial tenure of radical policy experimentation.
Ahead of today's policy release, Weston had been discussing his outlook for a "no-change" BOJ policy outcome, and had positioned for the event against market consensus, using the same framework that he and Jack had discussed at the end of December of market functioning and financial stability to determine policy outcome (as opposed to inflation-combating).
In addition to the Bank of Japan and the most intense market pressure they are currently under, Weston also explains what is behind the remarkable strength in the yen as of late, how it is possible for JGBs to yield above the so-called Yield Curve Control upper ceiling, and what's next for the "least predictable" major central bank, as we head into the critical end of Governor Kuroda's era.
See Weston and Jack from the previous December 2022 BOJ Day: Bank of Japan’s Capitulation Perturbs Global Bond Market | Weston Nakamura Dec 21, 2022: https://www.youtube.com/watch?v=hYR34YbXMvY&t=157s
Listen to Weston Nakamura and Emma Muhleman, CFA discuss the Bank of Japan in full detail on Twitter Spaces during live Japan trading hours ahead of the BOJ decision here: https://twitter.com/i/spaces/1BdGYyNpYAyGX?s=20
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.
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