What are MM’s thoughts on the Japanese Central Bank (BOJ) Intervention?

Hi Alex,

The Swiss event ended badly and quickly but that isn’t always the case especially if a central banks is merely trying to make an inevitable move more orderly in nature as opposed to panic like.

In the current scenario it would appear the BOJ want the Yen below 140 and to cap its 10-year target at 0.25%,  probably a futile goal if global bond yields continue to rise.  However they might be lucky this time if MM is correct and yields slip lower as risks of a US / global recession continue to increase.

• Ultimately if we see renewed strength in global bond yields we feel the BOJ will adjust their target upwards to 0.35%.
• Similarly if we see another 10% decline in the Yen above 140 we believe the dovish BOJ will be forced to tweak its “super-easy monetary policy”.

In terms of ripple effect we don’t believe it will be a Black Swan style of event as traders are already positioning for higher Japanese yields in the face of an increasingly hawkish Fed.

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Japanese 10 Year Yield Monthly

LAST UPDATED 24/06/2022 16:09

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Japanese 10 Year Yield Monthly

LAST UPDATED 24/06/2022 16:09