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MNI (London)
By Hiroshi Inoue
     TOKYO (MNI) - The Bank of Japan voted 7-2 vote to continue with yield curve
control and asset purchases, lowered its assessment of exports, industrial
production and the global economy, but maintained their view that Japan is still
expanding moderately, despite the heightened downside risks.
     The BOJ board maintained the overall moderate expansion assessment, noting
the "virtuous cycle from income to spending" was still operating, adding that
the economy "is likely to continue its moderate expansion".
     In the wake of weaker data, the BOJ lowered its assessment of exports and
industrial production, reflecting slowing economies in China and Europe.
     "Exports have shown some weakness recently," the BOJ said, moderated from
the previous statement saying they were "on an increasing trend."
     "Industrial production has been on a moderate increasing trend, although it
has shown some weakness recently," the BOJ said, adding moderate. It also said,
"Overseas economies have been growing moderately on the whole, although
slowdowns have been observed", revised from "growing firmly."
     The BOJ see weaker exports for the time being, although expected to be on a
moderate increasing trend, with "overseas economies growing moderately on the
     Despite heightened downside risks to both the economy and prices, the BOJ
expects domestic demand to remain solid, supporting the virtuous cycle from
profits to spending. However, there is a growing perception that slowing
overseas demand will eventually hit at home.
     A stronger yen remains the most troublesome factor for the BOJ, as it will
quickly impact on households' and firms' sentiment, impeding spending and
damaging the virtuous cycle.
     BOJ economists are also paying attention as to how slowing exports will
affect capital investment plans in fiscal 2019 to study the sustainability of
the virtuous cycle.
     --CAPEX FY2019 EYED
     Initial capital investment plans will be available in the BOJ March Tankan
business sentiment survey due out on April 1 and any pullback due to the China
slowdown could become apparent then.
     The BOJ's quarterly branch managers' meeting is scheduled on April 8, when
capex will be discussed and then policymakers may face the challenge of
considering additional easy policy at the April 24-5 meeting.
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI London Bureau; tel: +44 203-586-2225; email:
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