Japan’s 2-year yield briefly hit zero for the first time since 2015
The yield on 2-year Japanese government bonds briefly rose above zero for the first time since 2015 in Wednesday morning trading. The note gained 2.7 basis points to be just below the flatline.
Japan’s 2-year yield rises above zero for the first time since 2015
The yield on the 10-year JGB jumped more than 3 basis points to stand at 0.451%, also reaching 2015 highs, while the yield on the 30-year JGB rose 2 basis points to trade at 1.6%.
Yield moves inversely to price, and a basis point is equal to 0.01%.
– Jihye Lee
Bank shares in Tokyo rise again as the broader index falls
Japanese yen the strongest in more than four months
The Japanese yen continued to strengthen overnight after the Bank of Japan announced it would widen its yield curve control band.
The currency strengthened by more than 5% against the Australian dollar and the New Zealand dollar – while it strengthened over 3% against the US dollar.
The yen strengthened after the Bank of Japan announced it would expand its yield curve control band
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— Zavier Eng
Stocks hold on to gains, snap 4-day losing streak
The stock pared a gain on Tuesday, snapping a four-day losing streak.
The Dow Jones Industrial Average rose 92.47 points, or 0.28%, to close at 32,850.01. The S&P 500 gained 0.11% to 3,821.73, while the Nasdaq Composite rose 0.01% to close at 10,547.11.
— Carmen Reinicke
Bank of Japan is more hawkish earlier than expected, signals
The Bank of Japan’s surprise policy shift sent interest rates up globally as investors reacted to more evidence central bankers around the world will continue to push interest rates higher.
“It was definitely a surprise. I don’t think there was anyone out there who expected it,” said Ben Jeffrey, rates strategist at BMO. Japan’s central bank moved faster than expected to tighten policy. The BOJ changed its yield curve policy to allow the yield on the 10-year Japanese government bond to move 50 basis points either side of its zero target rate, up from 25 basis points.
The announcement pushed rates higher globally as yields on Japanese government bonds (JGBs) rose to 7-year highs. Rates move opposite yields. The US 10-year jumped o 3.68%.
“They were definitely the last ones to stop, and now they’re still dark but less so,” Jeffrey said. “It’s obviously bearish on JGBs and fixed income globally, but in the longer term it should help the yen, making Treasuries more attractive to Japanese investors next year.”
–Patti Domm
Expect a more challenging environment ahead, says Atlantic Equities
Atlantic Equities analysts expect a more challenging landscape for the global consumer in 2023.
“Inflation may well have risen on a headline basis, but input costs still remain high and companies are looking to at least hold if not further take prices in some cases,” analyst Edward Lewis said in a note. Tuesday. “That may become more challenging as elasticity levels begin to normalize with US retailers beginning to push back against prices, in line with where European peers have been throughout the year.”
He highlighted Coca-Cola and Pepsi as some of his favorite consumer picks, citing “category momentum, ongoing investment and strong execution supporting elevated growth.”
– Tanaya Machel
The stock market has yielded $11.7 trillion so far this year
It’s been a rough year for stocks, which are currently in a bear market and down to date.
From the market’s annual high on Jan. 3 through this morning, U.S. stocks have shed $11.7 trillion in market capitalization, according to data from the Bespoke Group.
“The maximum drawdown was $13.6 trillion at the 9/30 low, so we’ve seen the market cap increase by just under $2 trillion since then,” the analysts wrote on Tuesday. “In dollar terms, this pullback has been more extreme than anything investors have ever experienced. That’s pretty deflationary if you ask us!”
Of the $11.7 trillion, more than $5 trillion in losses come from just five companies – Apple, Microsoft, Amazon, Alphabet, Meta and Tesla.
— Carmen Reinicke
