10 Burst results for "Governor Kroda"
Bloomberg Radio New York
"governor kroda" Discussed on Bloomberg Radio New York
"You so much. We appreciate it. So news coming out of Japan, the bank of Japan governor kuroda. He is stepping aside, it served two terms ten years in total. What does this mean for Japan? What does it mean for the global economy to get a sense of that? We welcome Kathleen. Hey, she is the host of Bloomberg news. She joins us here in our Bloomberg interactive broker studios so she gets a gold star for showing up, not phoning it in. Kathleen, so big changes for Japan, what does that mean for Japan? What does that mean for kind of the global market? Well, the bank of Japan is there's the big three of global central banks. And that's the Federal Reserve. The European Central Bank and the bank of Japan. And remember, that's Japan with a 120 people, a 120 hundred, 20 million people is still the third largest economy in the world, okay? And it's investors send a lot of capital out of the country. They attract a lot of the capital in. Japan is quietly powerful on that stage. They have been through a long period of Abe nomics, which became coronavirus, of course, one of the most serving successful prime ministers in Japan's history recently deceased started to say in the last year. And governor kroda, two terms. He's the longest serving BOJ governor in their 140 year history. So a crux we're at maybe not a turning point. He's got the yield curve control, which is kind of the main thing I think that markets maybe people participants that don't know as much about the bank of China as you, but that's what they kind of grasp onto as the thing that could change, right? Well, they do. And remember, when Abe came back in office in 2012 and 2013, there was a he dragged in Corona or to stimulate the economy, the previous governor had been slow to do that cautious. No, he won a crowded a fire it up. So they did quantitative and qualitative, easing. They said we're going to get to 2% inflation within as soon as we could, and then they said within two years, fast forward, things went up and down. And it was 2016 when inflation had been rising. But mostly oil prices and it started falling back again. That's where they came up. They had an almost an all night meeting on a fortified boat. They put in yield curve control. And that's when they tied the ten year JGB to zero. And then gave it a little bit of a range on both sides. And over time, they kind of had to pull that out. But they bought trillions and trillions of yen to keep their ten year JGB anchor. I was gonna say, does anybody else own JGBs besides the bank of Japan? Well, they own something like 90% of the ten year JGBs and over 50% of all the outstanding government bonds. Well, hey, it's like what a quantitative easing by the fed and the European Central Bank taken to a whole other level. Has it worked? Well, they're kind of at 2% plus inflation now, but is it going to stay there? But no, not because of that, right? Having nothing to do. The whole world is facing rising inflation. I mean, yeah. They want to go in there without doing anything very likely. We'll never know for sure, will we? If they did absolutely nothing, because they did they did get Japan up to about consistently above zero, okay? Not in deflation. And you're right now, a lot of the gain has been in commodity prices, but right now they're almost a 4%. They're starting to pull back a bit. But no, this is a big deal for the rest of the world because if the Japanese have already started repatriating some of their bonds from overseas. And if they continue to do that, this is going to be a major upward pressure potentially on global bond yields. And they have, sorry, I just have a million questions. I love getting you in the studio because we hardly ever get to talk to you. I wonder about how much treasuries do the Japanese own. They used to be a huge holder of U.S. debt, right? Well, and they still own a lot. And I wonder about what happens if yield control is a way to go away from yield control. He's going to do it slowly. Okay. Is the new bank of Japan governor? At the bank of Japan, from 1998 to 2005, he, at the time, was one of the few when they decided to cut rates when they shouldn't have who voted a race race I should say voted against it. So here you've got this man an academic over the years knows everybody. He's about 70. He's been around for a long time. I think the bet right now is eventually he'll have to do something and they may start signaling that, but they're not going to move around right away. So, I mean, what do people think of at the end of this ten year career for Corona? Did he do a good job? Will you miss him? You interviewed him a lot. Well, yeah, I'm a fan. He will people miss him. I think or was he successful? Well, we had a poll. We had a poll. I think 56% said he was a success. And 44% say no. And the people say no, it's your argument, okay? Well, the yield curve control and all that didn't really get you sustainably there. But I would say, look, if he's leaving office with inflation at coming down to about 3% year over year from 4% with the BOJ at this last outlook, update on the economy and inflation saying, well, it's going to be 1.9% by the end of the year. And that's 2%. Okay, that's surrounding air you guys. So he leaves office with 2% inflation, the shunto the spring wage negotiations due to that every year came out on the stronger side, not super strong, but strong enough to give a sense well, maybe there's a shift, a shift in the country where the companies are realizing they have to pay people more, the people are wanting to see all that. They're ready for a little more inflation, right? And that was his biggest, one of his biggest obstacles was deflationary mindset. Japanese don't want to pay more for anything. That's their culture. Seriously. But now that seems to have shifted to, it's the biggest problem though is getting out of it, getting out of your control when you own so many bonds. How do you do that gracefully? And another big one more thing I forgot to throw in politics. They've got a big budget deficit brewing Democratic Party. There are a lot of economics, people. And 264% of GDP or something like that. 264% of GDP. And so not surprising a lot of politicians, hey, don't get away from your curve control too quickly. We don't want our financing costs to go up. So that's another thing I've been waiting is going to have to face. But I think it's pretty much inevitable that there will be gradual adjustments. They'll go from .5 on either side of zero and they'll gradually widen that out to get a more kind of a gradual shift that the rest of the world financial markets can deal with. Can deal with it. All right. Kathleen Hayes, great stuff. Thank you very much for coming in to our Bloomberg interactive broker studio Kathleen Hayes host of Bloomberg. Next time we do a longer journey. I feel like a half hour because I have a million still have a million questions. And you guys. You guys make me think, my God. That's exactly good stuff. All right, Kathleen, thanks so much for joining us here. A little bit of green on the screen here on this light trading day S&P up about a quarter of 1% here. NASDAQ
Bloomberg Radio New York
"governor kroda" Discussed on Bloomberg Radio New York
"We are in data that is really having trouble setting us a clear signal. They adjustment we've seen in markets has been quite small given the news that we have from pal. It's important that he laid out just how data dependent they are. And the willingness to pivot. The fed talks too much. I have thought that throughout this whole cycle, there's too much talking, too much talk of disinflation. If we are going to consider reaccelerating to 50 based on the data and they are very data dependent, the risk of a hard landing does go up. This is Bloomberg surveillance with Tom Keene, Jonathan farrow, and Lisa Abramovich. Life from New York City this morning, good morning, good morning, for our audience worldwide. This is Bloomberg surveillance on TV and radio alongside Tom Keane and Lisa bravi Sam Jonathan farrow futures negative about two tenths of 1%, a little bit later this morning, jobless claims in America. Then Thomas onto payrolls Friday and I think we're all asking the same question just how low is that bar for a 50 basis point height from this fed after testimony from chairman Powell. To me, it's revision Thursday and into revision Friday to me the revisions, as I said yesterday, John is everything out there. They've never been more important in the nearest. Can I just say, John, did this show is forever scarred by you? It's your fault. What's happened? We're going to show opening folks, and we talk right up to the opening, and bramos talking about Verstappen. I know. I mean, that's how bad we exist. We descended down the river. Is that what we please? Thank you. I appreciate that. Some discretion. Thanks. Let's talk about race. Whenever Tom says, let's talk about what we talked about in the break. I think we're sitting there nervously. This first step with a bundesbank, I can't remember. No, but if he was, he'd be asking for higher interest rates, no doubt. Good segue. Love it. Don't you think? Everyone else. He's got lots of savings to Tom. I'm going to wish for the price action. We're not even going to have an opening conversation this hour. Futures negative two tenths of 1% on the S&P, you've heard some chairman power for two days. That's all over with. Slight slight walk back on day two. Yes. So if some butts ultimately, there may be comes down to the economic data it's payrolls tomorrow. It's CPR and a 14th time. And then the fed on the 22nd. Vix 19.46, I know that all the adults tell me the vix right now is not giving me good information. You know what? It's there. And equities are sort of kind of like been immovable, given the fixed income narrative, the economics narrative of the last 48 hours. They said a ten year just in and around 4% right now. Let's see how the narrative shifts in perhaps a half an hour or perhaps an hour. We get the data depth that includes challenger job cuts. At 7 30 a.m., one of these peripheral types of measures that take on new importance in the era of data dependency. Initial jobless claims come at 8 30 a.m., do we get a sense of the ongoing strength that we got yesterday from the jolts data, you can look at some of the quits rates for possible softening, but the bottom line is 1.9 job openings for every unemployed American close to the all time high record of just north of two jobs per every unemployed American. This is unsustainably hot for a Federal Reserve that has not seen the progress that they're looking for. Perhaps we'll get more on that from about 10 a.m.. We get a vice chair for supervision. Michael Barr, he will be speaking about crypto, perhaps we'll also talk about what we heard from Jay Powell, 50 basis points where the threshold looks like. And in related Central Bank speak, it is the last meeting for governor kroda over the bank of Japan tonight. His term ends on April 8th, and this a lot of people are looking for to get a sense of a, whether he wants to open the door to potentially moving away from the yield curve controller or widening the band even at a time when the ten year Japanese government bond keeps trading above it. And today, President Biden will be releasing his campaign speech or his budget postal, whichever way you want to say, it's going to include a host of tax increases, including a 25% minimum tax on billionaires as well as eliminating that carried interest, tax break, a number of other proposals that a lot of people say are dead in the water. It will be interesting though to see, again, the contours of the debate raising the debt limit or basically how do you deal with the debt ceiling, given the fact that basically you either have to cut your benefits or you have to raise revenues, one or the other, and it's clear which side he's taken John. Dead on arrival is in pretty much every single headline in the United States this morning. Lisa, thanks for that Tom. That seems to be the headline. We have a jewel, the congressional budget office that will analyze those proposals. I'm sure they'll be told by a GOP member at gunpoint. You've got to analyze those four items, but the answer is you can look at the analysis and be a fear. The heart of the matter is John, are we growth the enough to handle our debt? That has changed in the last 6 months with this new higher interest rate. I think the chairman was pretty clear in testimony over the last couple of days. The growth of the debt in this country is unsustainable. I'll be honest, IMF meetings in April. I'm reading a lot about this getting up to speed in this new world. It's a new world for Washington. It's a whole new world. After all. Thank you, Tom. Kristen Milligan, managing director. Portfolio strategy. We're not
Bloomberg Radio New York
"governor kroda" Discussed on Bloomberg Radio New York
"Just got 9 a.m. across Deborah's I'm using commended dean in Dubai. The bank of Japan delivered very little. In fact, they did not deliver any move in terms of the interest rate and they maintained the yield curve control program. And at the moment, we're seeing aggressive repricing in dollar yen. We are off by about 2.5% to short of the one 32 handle. It was what was expected, but it's still raised the stakes in terms of how the unwind is going to happen later on in the year. We've got, of course, our reaction as well in U.S. ten year yields with three 47 76. You ten year break-even falls to a two year low after the BOJ decision. Equity futures in the United States taking this fairly in stride and Brent crude with upside of 8 tenths of 1%. I want to get to the BOJ bond buying because that's what it's all about, isn't it when you think about yield curve control? And this is the chart, the kind of tells the story. In fact, it fully tells the story because this is your daily government bond purchases, which kind of hover around the certain range for 2013 all the way to sort of the latter part of 2021. And then boom, you get the spikes, the spikes come again and they come again and ¥1.85 trillion. These are daily government purchases. Rodrigo quetzal writes that the current buying is just not sustainable. The December functionality worsened, the metrics he's looking at is liquidity and the smoothness of the JGB curve. I want to get to the commodity story as well. Another day, another move in copper. But city are not jumping on board here with the bulls call, at least in the longer term. They're making it clear that it's not a great risk reward for base metal balls. We are higher by about 2.1%. They're attributing part of copper's recent move to a short squeeze rather than a run up in the physical corporate demand, which will be closely watched following the lunar new year holiday that happens of course on January 22nd. Let's get to the bank of Japan and more color because it's maintained that yield curve control program and it defied calls to abandon the policy to restore bond market liquidity. We're now joined by our global economics and policy under the Kathleen Hayes. He's outside the BOJ headquarters in Tokyo. Kathleen talked to me about the mood following this BOJ decision. Well, certainly kind of a wake-up call that even as much as traders interpreted the decision to widen the yield curve banned from 0.25 at the top to 0.5, that was happened after the December 20th meeting a wake-up call that governor kuroda is not doing a big push now towards exiting extraordinary stimulus and taking that as the first step. In fact, besides not widening the band, they also said they will continue to buy bonds aggressively as needed. They are ready to add more stimulus to the economy as needed. These are kind of the phrases they use all the time. It underscores that no change was made. And in fact, a very key thing yousef is that the CPI forecast for 20, 20, 23, that's this year, and next year, core CPI, which takes out fresh food prices, doesn't even hit 2%, let alone get there. So this is another indication that they are taking the more cautious path. One thing to consider, of course, is maybe the reason they didn't want to move is twofold. If they moved again, if they widen the yield curve control band again, that the bond market would do just what it did over the past four weeks. It would be more aggressively pushing at the top of the ceiling. They didn't want that to happen. At the same time, more than one person has said it might have been sort of embarrassing for governor Corona. If he made a move that was intended to calm down the bond market, improve bomb market function, it instead created more bond market volatility so that they had to do something again today. Having said that, I think people are saying, this doesn't rule out some kind of tweak, another kind of tweak, maybe even a more dramatic one, like focusing on the two year note yield instead of the ten year note yield in terms of what kind of purchases you're going to control. That could happen in March, but I think a lot of people are already saying march is a live meeting. I love how you threw a punch to kind of show that the tumultuous bond market that's on the way. But in terms of the sequencing here to yearend Kathleen, if not today and if not next month, when are they going to make that big shift? Well, and that's another element here. Maybe governor kroda and the team now didn't want to take another step and make it look they there started the maybe gradual, but the steady normalization process moving out of the extraordinary stimulus that has been the policy for the last ten years. And so that would be letting you wouldn't want to do that because you want to leave it to the next governor. The next governor is going to be having his or her first meeting on April 26th. We're going to get the nominations for deputy governors and the governor, probably in the first couple of weeks of February, that's just around the corner, then the march 8th meeting that will be governor Crosby last one. And he steps down on April 8th, April 26th. You've got a new governor, perhaps that's also the thing. We work with it, we can to keep the bond market running smoothly for
Bloomberg Radio New York
"governor kroda" Discussed on Bloomberg Radio New York
"Mildly so with the ASX 200 better by a tenth of 1%. We'll take another look at markets for you. In about 15 or so here on daybreak Asia. Let's update global news next Ed Baxter in the Bloomberg newsroom in San Francisco Eddie. All right, thank you very much to the song Kong may soon scrap PCR test requirements for arrivals from China. That's a Hong Kong times report. Lawmakers have called for a switch to rapid antigen tests. South Korea president Yun soki Al's office has clarified statements that the ROK may need to acquire nuclear weapons saying it has not made any plans to do so. It got major pushback from the United States. Pentagon says it is struggling to get China to resume military to military talks, German Chancellor Olaf scholz says Germany believes that globalization is the thing that needs to be done and needs to go. It's a future of the globe and tells Bloomberg's John micklethwait the China is part of that. Schultz says Germany will support Ukraine as long as there is need, and the mayor of key vitali, Klitschko in Dallas, with Bloomberg's David Weston says that the fight to keep infrastructure is intense and former U.S. Secretary of State Henry Kissinger is reverse course on Ukraine, says now he believes Ukraine joining NATO could be an appropriate outcome. In San Francisco, I'm Ed Baxter. This is Bloomberg to Sydney Paul. All right, thanks very much. Well, the bank of Japan delivers a much away policy decision today, joining us live from outside the bank of Japan is Kathleen Hayes, Bloomberg news at global economics and policy editor. Kathleen knew have been following and covering many central banks, including the BOJ for a very long time. Can you recall a meeting? There was this interesting. Well, no, certainly not from the bank of Japan. I mean, I always find the interesting and we all do. But I would say it's beyond interesting. It's kind of exciting, isn't it? Because in December, the shock move to white and the yield curve control ban that keeps their benchmark ten year government bond between it was 0.25 on either side of zero. Moved it to 0.5 on either side. Is there a wool markets exposure? Because not only did they make the were they surprised, but does this mean the bank of Japan has embarked on a policy move of exiting extraordinary stimulus, the policy basically of the last ten years. That reverted markets on that day, it could be right again, even if they move because then bond markets are doors open to even higher yields in Japan. That could feed over to the rest of the world. If they don't move, well, then there's the uncertainty of, and particularly with the yen, the Jensen strengthening, they're all kind of long positions people probably a lot of them square it up ahead of this because whatever the BOJ does, it's a big deal. From the BOJ's standpoint, do you think that they see what they did in December as having been successful? That's a good question. I think there's a debate how successful it was. They shot the markets. They did it according to Martin schulz and Ed Rogers who I spoke to earlier today here in Tokyo. That quiet time, December, let's do this and not rock the markets too much. Well, they did want the markets. And furthermore, they've been more blind investors on traders have been pushing against the top of the band. They push the ten year JGB above .5. And then so the BOJ has been had to go into ever higher records of bond purchases. So was that successful? Will this mean that or will they say, well, will they say we've done too much? We don't need to do any more than new governor case over in April way for that. I think it's an open question. Yeah, you mentioned that traders have been tasting the BOJ that's something one of our earlier guests said Rogers said Rogers investment advisers suggested as well as the BOJ at risk care of losing control of the narrative. Well, I have they already. I think that's I think nobody really knows at this point. If the narrative is, we are opening the door and we're keeping things trying to steady the boat until the next governor takes over and takes and then has to take the big more definite steps from removing stimulus and YCC and even getting rid of YCC yoke of control. Then that is a narrative that they'll have to reinforce today, Paul. I think that's maybe one of the challenges communication right now for governor Corona when they put out their policy statement also when he has his big press conference after the meeting for porters are going to pound him with all of these questions. Yes, I think what's interesting is bank of Japan overall is kind of seen as conservative yet. Corona son he does like to surprise the markets in 20 seconds. What's the interesting aspect to that? Oh, are you rooting for a surprise? Another step towards something that could maybe that would get high enough for people not to keep pushing on the BOJ. And at the same time, even though governor kroda on December 20th, the last meeting where they had the shock or made the shock. He said, this was a tweak, it's not a raid hike. We're not moving things yet. But it would be clear that they are on this path. It's something that has been probably even condoned by the new prime minister's government. A lot of behind scenes talks are what people think have been going on. So it would be a very powerful signal and a very interesting one at that. Absolutely. Kathleen, thank you very much for joining us. This
Bloomberg Radio New York
"governor kroda" Discussed on Bloomberg Radio New York
"Question I think that the market is asking and that's why we're pricing in cuts in the second half of the year. That's really interesting Valerie, isn't it? So your argument is and one that we've heard from some beneficials as you say is that as inflation falls, the impact of the rate increases we've sort of seen to date, increases on the economy. So that's an interesting one. So we'll continue to watch that because I know not everybody I know mark up more, for example, on the market side. It doesn't see the possibility of rate cuts. We'll watch how that develops interesting for 2023. Also interesting. The BOJ. Now we'll hear from them next week. Yes. Something next week we're going to get an abandonment of the yield curve control policy others think next week's too soon it'll be later in the year. Yes, the city came out actually saying they think they're going to pull the whole YCC yield curve control entirely, which would be a shock. If you think about just a month ago, we didn't even think that this was this was going to be possible. Any hawkish shift from the BOJ was going to be possible until Corona sit down in April. So there has been a huge shift in where we think the BOJ's policies likely to go and how fast. Now, I'm in the camp that I think next week's decision is too soon, but we did get all a lot of noise coming out earlier this week from local press in Japan that they are continuing to evaluate their strategy. And look, the city note said that it's almost saying that the damage to the BOJ as an institution could be smaller under governor kroda. So let's throw Corona under the bus. So that the new BOJ chief when they step in, they have a clean slate, and you think about Japanese culture, maybe that makes an argument. Maybe that's what's happening. I mean, they have shown that they're willing to surprise as well. Haven't they gallery? They certainly did that to us. In the supposedly quiet week for Christmas. Our markets report a Valerie title. Thank you very much. Let's get more in our top stories now from the ongoings. Steven, good morning to you and thank you the UK economy has defied shrinking expectations and grew last November. GDP rose 0.1% in the month of positive beat on The Economist estimate of 0.2% drop. The ONS has spending around the World Cup offset the impact of strikes. Now the Bank of England policymaker Catherine Mann says it may take a significant recession to tame inflation here in Britain when the BOE raised rates by 50 basis points to 3.5% last month, man alone voted for a 75 basis point hike. And finally, the Chinese government has set to take so called golden shares in units of tech giants Alibaba and Tencent, according to a corporate database, Beijing brought 1% of an Alibaba digital media subsidiary and that was last month. Global news 24 hours a day on air and on Bloomberg quicktake. Powered by more than 2700 journalists and analysts in more than 120 countries, I'm Leigh Anne guerin says, is Bloomberg Stephen. Leigh Anne, thank you very much coming up next more details on the latest UK GDP figures. Plus, the latest roundup of corporate news from Charles capel in the London rush stay with us for that. This is Bloomberg. Bloomberg radio on demand and in your podcast feed. On the latest edition of the tape podcast, a conversation with Laura Martin of Needham. What's your Disney call here? So my Disney call is I think bob Iger is best in class at managing people. Both down and I think and I think up. So I think that we're gonna get a lot less drama at The Walt Disney Company, which I think is good for a content company. You know, Paul, they don't have a content. Their content, revenue is in other under the under bob shaping. How dismissive of what is the core business there that they build all of their other economic engines around. So I think we get a refocus on content, which I think is deserved. And I think he sells. I think The Walt Disney Company has been very unsuccessful at succession planning. And I think it's a hard job. It's almost an impossible job. Just like running a government in terms of the brand stringency. So I think Apple buys them. I think that is a good home for them. Really? I do. You think Apple? Even saying this for years that Apple should buy Disney. Yes, and he has said, if Steve Jobs had not died, I would, 'cause he was on his board, right? Yep. I would have sold Disney to Apple. That is a good fit. The government will make sure Apple says you can't make your content exclusive. That's smart for ten years. Like I did with NBC. You can't make this content exclusive when Comcast bought MDC. So for ten or 20 years, Apple won't be able to make Disney content exclusive, but at the end of the day, that is a good home. We've got a billion of the wealthiest consumers on earth in the Apple ecosystem. And the brands are completely brand consistent. And I just don't think there's a person out there that can run The Walt Disney Company. Bob Iger's got so many wonderful things on his resume. He's a nonstop. But a huge failure is the lack of Succession. Yeah, I agree. And it hurts his legacy. Yes. Because as a general manager, you need to have a bench and
Bloomberg Radio New York
"governor kroda" Discussed on Bloomberg Radio New York
"2%. So while fed is projecting that unemployment rate will peak at 4.6%, which is just 1% higher from where we are today. History shows that it's very difficult to achieve. So it could go higher. Thanks so much for joining us. Really interesting commentary. Avila shanar in there, senior investment strategist at standard chartered wealth management. This is Bloomberg. On the latest edition of the tape podcast, a conversation with Kathleen Hayes of Bloomberg television on the back of Japan. Kathleen, I came in here and listened to the energy John farrow and Tom Keane have about the BOJ. I'm like, I don't know. Can you tell me why this is important? Why this important? Oh my God, please. First of all, be surprised. I was sitting on the 6th floor in front of our camera up there, getting ready to react to this with our team in Tokyo and Asia. And when I saw the headline come across, widening yield curve control. I was shocked. Everyone was shocked. All the signals coming out of the bank of Japan, including governor kroda, repeatedly was no we're not ready. And the expectation has been, not ready to start making this move, even with inflation rising, Corona kept saying, well, we don't know if it's sustainable. You know what? There might be a global recession, bring down prices. That's we need the stimulus. And then we're getting a new governor. The new governor is going to be in place in April. And at that point, that's been the expectation when it would start. But the BOJ has been insisting even when the shift away from extraordinary stimulus started, it would be gradual. And when crota had his press conference last night, one of the things he stressed was, we haven't changed our forward guidance. We're still concerned that inflation may not be sustainable, we just have to rise. The spring negotiations start off to the first year probably in late February early March. That it was about financial stability, keeping and there's a big concern about the weekend, right? That's been something that very unpopular with the public. So this is a step. But one thing to say, it's not clear that the regime shift has fully begun, but at the door is definitely wide open. It's
Bloomberg Radio New York
"governor kroda" Discussed on Bloomberg Radio New York
"This is boulder. On the latest edition of the Tate podcast, a conversation with Kathleen Hayes of Bloomberg television on the bank of Japan. Kathleen, I came in here and listened to the energy John farrow and Tom Keane have about the BOJ. I'm like, I don't know. Can you tell me why this is important? Why is this important? Oh my God. First of all, big surprise. I was sitting on the 6th floor in front of our camera up there, getting ready to react to this with our team in Tokyo and Asia. And when I saw the headline come across, widening yield curve control. I was shocked. Everyone was shocked. All the signals coming out of the bank of Japan, including governor kroda, repeatedly was no we're not ready. And the expectation has been, not ready to start making this move. Even with inflation rising, Corona kept saying, well, we don't know if it's sustainable. You know what? There might be a global recession, bring down prices. That's we need the stimulus. And then we're getting a new governor. The new governor is going to be in place in April. And at that point, that's been the expectation when it would start. But BOJ has been insisting even when the shift away from extraordinary stimulus started, it would be gradual. And when koda had his press conference last night, one of the things he stressed was, we haven't changed our forward guidance. We're still concerned that inflation may not be sustainable. We just have to rise. The spring negotiations start off to the first year probably in late February early March, that it was about financial stability, keeping and there's a big concern about the weekend, right? That that's been something that very unpopular with the public. So this is a step. But one thing to say, it's not clear that the regime shift has fully begun, but at the door is definitely wide open. It's clear that's where the BOJ is going
Bloomberg Radio New York
"governor kroda" Discussed on Bloomberg Radio New York
"Is the chance for more volatility being driven out of the next actions that the bank of Japan takes because if governor corrode is term is ending soon, you're going to get a new governor in there. Will that governor actually decide to hike interest rates or won't they will they get rid of the band altogether and kind of end yield curve control instead of just continuing to increase the band? And even though even though governor kroda has said, this is not an interest rate hike. It is an interest rate hike because the fact is that you did see long-term. So 30 year Japanese government bonds went from very low levels to one and a half percent doesn't sound very high. Vis-à-vis the U.S., which has more than twice that yield. And in our long end. But nonetheless, you had this very serious deepening of the yield curve in part because people thought that natural interest rates in Japan should be much higher than they were. You still don't have the same type of inflationary problems in Japan that you have in Western Europe or the United States. But nonetheless, their inflation is now positive, right? Whereas it had been hovering near zero and generally negative for a long period of time. So I think the fact that there's an acknowledgment now by markets that, hey, we do have some inflation. Maybe we don't need policy to be as easy as it has been. So I think the BOJ's actions are have the potential for creating more volatility in other developed developed market rates. Markets, over the next couple of months? Kathleen, we have a some strength in the yen today, but boy it had been weak. What's the bank of Japan? How does it really feel about its currency? What does it want it to be? Because it seemed to be so weak. They say, okay. Not so weak. And again, it is a source of it's a source of discontent. In Japan, for so long, we're worried about the getting too strong, right? You know, the ultimate carry trade currency, everybody wants to use it. You don't have always control it completely by the Central Bank. But this ultra weakness has been a problem, and when governor kroda said of the press conference, put your attention on foreign exchange on financial markets. I think that's another signal that this truly is his concern. And again, this ivory raises the question of how quickly they'll get rid of yoga control. This is going to take time. But one of the lead contenders, Hiroshi nakaso, who was made a deputy governor of the BOJ back when Crowe made was made governor looked at somebody who may be in favor now because he will be more on the side of let's move away from this extraordinary stimulus, let's normalize this all these bonds we're buying. You know, the government owns excuse me, the BOJ owns more than half of all the outstanding JGBs now. And that has been a concern. It's been complained about. They haven't seemed to respond to it. But this is definitely a time of change for the BOJ. Will it be quick? We'll see. Okay. AI real quick. I'm looking at the crowds in Buenos Aires, a 100,000 put people celebrating Argentina. Pretty good World Cup, huh? Yeah, the on field action was very exciting in this World Cup. It was some of the it was probably the best World Cup of my lifetime quite frankly. Ever. Who didn't want messy, you know? I was rooting for France. And completely was wrong, but I did think in buffet played really well, just saying. He continued, I read. You get a hat trick in the World Cup finally, you got to be, you can't be unhappy, right? Amen. Yeah, and then how big is it going to be in four years from now? I wrote in North America. Yeah, I think that it really will expand the game here in the U.S.. I think just this final I can't tell you how many people hit me up on all the techs I was getting about that, hey, this one game did more for soccer than U.S. soccer has done in the last four years. And so I think once all that action comes here to the U.S., I think it will just propel the sport even more. All right, great stuff. I have a Jersey Bloomberg interest rate strategist. Kathleen Hayes joining us in studio here. She is a Bloomberg television correspondent, really appreciate getting her perspective. Right now, let's head down to Amy Morrison, D.C. four
Bloomberg Radio New York
"governor kroda" Discussed on Bloomberg Radio New York
"Pellegrini Denise. Thank you, Brian. A federal appeals court has lifted that hold that had been preventing the Justice Department from using those classified documents from former president Trump's Florida state in a criminal investigation into those documents. Trump had asked for that hold. Supreme Court Justice clarence Thomas wife Ginny Thomas will reportedly meet with the House committee investigating the January 6th riot. Watch for strong talk from China's president Xi on Taiwan. Kyoto says she plans to mention that unification with Taiwan is one of China's goals when she speaks at next month's party Congress. Protests in Russia as Putin moves to call up hundreds of thousands of additional troops for Ukraine, some people meantime trying to flee the country rather than serve. And Formula One could be a boon for Singapore's nightlife business, the Singapore Grand Prix means businesses are rolling out the concerts, the VIP suites and the luxury dining, even the Singapore zoo is offering nighttime safaris. And in a different kind of zoo, you might say Julia one nightclub is charging $70,000 a table, Juliet, in case you know, there was a story last week Denise about $2000 a night on average hotel rooms. I feel like I should rent out my apartment. All right. Let's talk more about price pressures and join Kathleen Hayes Bloomberg's global economics and policy editor joining us from our New York studio. I know we're going to talk about the bank of Japan. Kathleen, but you are a fed watcher. So I wanted to get your thoughts on what we heard from Jay Powell because it did seem the strongest indication yet that perhaps a recession is the price to pay for crushing these four decade high inflationary pressures. Well, actually, he has said as much. She said he wishes there are a way to do this painlessly, but unfortunately there isn't. That is facing reality. Many economists economists who have followed the fed for a long time who have studied over the years never jumped on that pivot bandwagon that investors had such a hard time getting off of. It just didn't make sense. You have to slow demand. You have to slow down the economy to bring down inflation. And the dots, of course, totally underscored it because they made such a big move in June. As recently as June, the median dot was for the funds rate to go up to 3.4% this year and 3.8 next year. Now by the end of the year, this year is supposed to be over four four four four four and then four 6 or four 8 or even if you're in the top Echelon of the top 6 of the dots up to 5% of four by the end of the year so that's another 125 basis points from where we stand now. Interestingly, though, he did kind of stop short of saying recession outright. Although, as a part of this forecast, they're looking at an unemployment rate that would move up around 6 tenths of 1% to I think, speaking of four four to around 4.4%, the U.S. has never had that kind of move up 6 tenths of 1% in the unemployment rate and avoided recession. So to your point, while he's not saying it explicitly, it's right there in front of everyone. And that was so important, Doug, and Juliette, because when that forecast that I was one of the dots, I remember was junior march where the fed saw inflation coming down, but unemployment only go up to 3.7%. People call that a magical forecast. It could not happen. He did, of course, say, in terms of soft land, he points out, and this whole thing about, if you go fast, go hard, you've got such a strong labor market right now. Maybe you've got a chance of having something that is just a severe slowdown. Or maybe a very mild recession. Right now their GDP forecast is what I think it's this year. It's 1.2 and next year, yeah, 0.2, but basically flat growth. So is there a chance he held that up? But I think what's most important is that's not going to stop them. That they're going to go ahead anyway. We were talking, of course, on Bloomberg television and radio to Randy kosner and I know that he mentioned this in the TV interview as well about really shelter and rents and how much that way is in to the overall core PCE and that means it's going to be slow to come down. So just talking about that peak inflationary pressure and when we do see prices come down just tell us a little bit more about what Jay Powell was seeing. Well, that the, they know that things could, they don't, for example, right now, part of this is commodity prices coming down. That's good. They know that supply chains are an issue. That could be a swing factor. I think that he's being acknowledging that that's what they like to see. But the whole point now is bringing demand down, right? That's what he's saying. One of the things I thought was very interesting. He came right out and said that the housing market probably has to go through a correction to get better in balance and that over the long term what is needed is supply and demand to kind of be better more efficiently aligned. And inflation when it comes to housing, even though there may be some form of correction, inflation in the housing market will remain elevated for a while. So they've got their eye on the housing market. We've seen some of the data, home sales data, even construction spending on new homes. These numbers are already weak as a result of the move up that we have seen in mortgage rates already. And the other point that he made with respect to the mortgage market was that the fed is as the balance sheet unwinds, not looking necessarily to be aggressive and unwinding the mortgage backed security potion. That would only throw a lot more fuel on the fire. So I think there are aware of the risk that they are running. They want things to correct, but they don't want an outright collapse of that. I think one thing that struck me in those comments, so we said, look, this was a housing market. We're coming off a housing market. People would knock on your front door and say, I'll pay any price you want for your house. I think that's a very important point. It was so hot. It was crazy hot for a number of reasons. Partly part of the pandemic and working from home, et cetera. But putting it in context, it was red hot. Houses are so unaffordable in this country right now. It's crazy. Home prices come down a bit. It really won't be bad for them. But it is one more thing that will slow down the economy. You're not buying a new fridge, not buying a sofa, maybe you're losing your construction job. So it definitely is a price that will be paid. All right, let's move to the bank of Japan because it could not be more different expected to remain with its accommodative stance and we don't ever have a clear time on when this decision is going to come through which makes your and mine and all of our jobs a little interesting, but tell us about what we're expecting in terms of perhaps some move to the yield curve control. Nothing. Nothing is going to change. That's what governor kroda has made so very clear. He is not budging because number one, yes, inflation is rising. And that's great, except it's rising for the wrong reasons and because commodity prices are rising. And because of a week. We currency as well. Yeah, yeah, and wages are starting to rise a little, but that's what he feels they have to see. In fact, we did a survey at Bloomberg that the idea that the view is that the BOJ will have to see inflation at 3% or higher for 6 months or more before it will even think about moving policy. And a lot of people still think this is not this change isn't going to happen until governor crota leaves in March. When he does his second 5 year term and a new person come in, it will be a logical, natural time to start moving in that direction. But all of his public comments have been no way not now. So the
Financial Issues
Governor Kuroda, Bank Of Japan And Europe discussed on Financial Issues
"Europe and turning to central banks. The Bank of Japan says it will keep interest rates extremely low through at least the spring of twenty twenty if four costs it won't hit. It's two percent. Inflation target for at least another three years that would be nine years off to governor Kuroda launched the banks radical