The Bank Of Japan Unleashes Chaos

Wednesday, September 14, 2016
By Paul Martin

by Tyler Durden
ZeroHedge.com
Sep 14, 2016

Last week we wrote an article in which we explained “How The Bank Of Japan May Be About To Unleash A Global Selloff.” While some may argue if what we have seen in the past few days is a global selloff or just a significant repricing of risk, one thing is clear: as Kuroda plans his next step, he has certainly unleashed nothing short of global chaos.

Before we get into the specifics, consider the following apt summary courtesy of RBC’s Charlie McElligott, who writes the following in his morning wrap:

“The BoJ “trial balloon” media-blast is being cranked-up to ‘11’ in the past 24 hours, with headlines in both Nikkei and Reuters have touted their desire to go even more negative on rates (as stated in the “RBC Big Picture” first) and now this morning, we get headlines that PM Abe adviser Nakahara is calling for BoJ purchases of 10T yen-worth of foreign bonds in an effort to weaken the Yen (despite Abe saying just last week that such purchases are illegal under Bank of Japan law if they are meant as a form of currency intervention). Funny convo with a customer—basically stating that even if we have the press release listing exactly what the BoJ was going to do, the market response to various policy mixes is such a coin-flip that it’s nearly impossible to prognosticate.”

Confused? You should be, but perhaps not as much as the BOJ itself, which days after leaking intentions to implement a “reverse operation twist” as first explained here, is realizing this may not be the most optimal route.

Consider first what Reuters wrote overnight in “BOJ to make negative rates centerpiece of future easing”, call it “trial balloon #1”, in which it reports that “the Bank of Japan will consider making negative interest rates the centerpiece of future monetary easing by shifting its prime policy target to interest rates from base money at its review next week.”

The Rest…HERE

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