Quick Note on Market-Moving BOJ Negative Rates Headline
What you need to know about “BOJ Arranging To End Negative Interest Rate Policy At March Meeting - JIJI Press
Quick note on BOJ neg rates heavy press leak activity ahead of upcoming meeting.
I am currently working on an article to cover all this in depth regarding negative rates (some snippets included below), but a few quick comments in light of the latest cross-asset moving headline just dropped via JIJI PRESS:
*BoJ Arranging To End Negative Interest Rate Policy At March Meeting - Jiji*
1) The translation of the article content is that earlier today (3/14): BOJ is now preparing to move on lifting rates out of neg at next week’s meeting, as the spring wage negotiations taking place this week so far have resulted in historically strong (for 🇯🇵) wage hikes. Tomorrow 3/15 is the last day of these negotiations before BOJ meets, and board members’ decision on rates will just need confirmation from results tomorrow.
2) There have been a ton of press testing leaks of BOJ & neg rates all week (month), but they’ve all just said (that “anonymous sources close to the BOJ” - i.e. BOJ said) that BOJ will discuss & consider exiting neg rates at the March meeting (& no shit, of course they’re discussing the topic, that’s not news). No one has (yet) said BOJ will take action- and this latest from JIJI is the first/furthest on actual preparatory activity underway. Hence the current market move.
3) My comments on JIJI News specially: In this latest- nowhere are they citing “sources close to the matter” / “anonymous BOJ betraying staff” etc, as per every press leak by everyone else. Which means JIJI is quite literally just reporting what BOJ is doing, and not what they’ve been told (to leak) what BOJ is doing. In other words, they might as well just make shit up out of thin air - and why the hell not? Unlike Nikkei News (the “official BOJ public communications arm & policy leaker with 1000 batting average of pre-reporting every policy change meeting under Gov Ueda), or Bloomberg, or Reuters, or FT (which is owned by Nikkei), JIJI press is not a subscription-based biz model. They’re in the biz of clicks and eyeballs. So- in this current culture of BOJ media pre-leaks ahead of policy uncertainty, of course there will be actors who would want to cash in on this horrendously shady practice- particularly if you’re a media outlet who DOESN’T ever get that official BOJ insider scoop - which is JIJI. So, this latest headline out of JIJI about “BOJ now making preparations to lift out of neg rates next week” is NOT BOJ communicating to markets (if they wanted to get this message out, why the hell would BOJ choose a non-English language Japanese-only outlet to drop the headline at 🇯🇵10:30pm, when the only market/participants who could understand and react/reprice are not open for trading, and goes over the heads of the rest of the non-Japanese speaking world? BOJ press leaks don’t work that way.)
So, EVEN IF whatever JIJI just randomly made up and published comes true, it still has no connection to some BOJ pre-communication strategy.
4) Why am I focusing so much on pre-BOJ press activity (now, and for the bulk of my upcoming article, for which I’ve included snippets of images from) for this upcoming BOJ meeting? Because when BOJ took rates negative in the first place back in Jan’16- this too was executed via a media-tricking tactic- which blew up in Kuroda’s face, failed immediately upon announcement, and got BOJ trapped in neg rate policy unchanged for 8 YEARS TO THIS DAY.
And THAT is where neg rates in Japan were borne out of- so let’s not forget that fact: BOJ flat out denied neg rates coming to Japan T-1 week prior to neg rates unveiled in Japan. Now BOJ (granted under different leadership) is hyping imminent neg rates exiting (and JPY has conveniently strengthened off teetering from that USDJPY 150 cliff).
Some snapshots below of images from the coming article on BOJ press testing / leaking, distinguished outlet by outlet (yes, knowing the context of each, vs “the media” as a monolith is a night and day difference in filtering noise from policy).
So keep an eye out for my full piece coming to prep for a potentially historic and pivotal major central bank meeting. For free subscribers- please consider upgrading to paid, not just for full pre/post BOJ market commentary access and content, but to help support Across The Spread in publishing timely, in-depth, differentiated multimedia content in as timely and frequent a manner as possible. Prices increase in April, so upgrade to lock in current rates now.
In the meantime - keep JIJI and any other press leaks (which I’m sure are far from finished) in the aforementioned context - and remember the most accurate of all press leaks (which just came out once again) regarding BOJ policy decisions:
Hope you’re ready for next week!
Thanks as always,
Weston
Hello Weston! Just became a paying member, you deserve every penny. One question if I may: can we track the nisa flows to us equities? If so, how's it looking?
So, what’s your bet, like you suggested before not negative doesn’t mean positive. Will it be zero? Hmm, interesting times.
And almost the same timing as @agnostoxxx’s (A)Ides of March scenario on the 18th in the US.