Surprise, Surprise, Surprise! Japan Moves Monday

[Realistbear]

http://www.chron.com/disp/story.mpl/ap/business/3730534.html

Report: Tokyo-Mitsubishi Bank to Up Rates

© 2006 The Associated Press

TOKYO — The Bank of Tokyo-Mitsubishi UFJ, the world's largest bank, said Friday it will more than double interest rates on one-year and longer time deposits beginning next week _ a first rate hike by a major Japanese commercial bank in five years, according to media reports.

The decision follows the Bank of Japan's removal of its super-easy monetary policy, which has pushed up market interest rates.

Effective Monday, the bank will raise interest rates on 1-month to 10-year time deposits, currently set between 0.02 percent and 0.25 percent to 0.02 percent to 0.55 percent, public broadcaster NHK said.

Awooga!

Edited March 17, 2006 by Realistbear

[Down with the BBC]

http://www.chron.com/disp/story.mpl/ap/business/3730534.html

Report: Tokyo-Mitsubishi Bank to Up Rates

© 2006 The Associated Press

TOKYO — The Bank of Tokyo-Mitsubishi UFJ, the world's largest bank, said Friday it will more than double interest rates on one-year and longer time deposits beginning next week _ a first rate hike by a major Japanese commercial bank in five years, according to media reports.

The decision follows the Bank of Japan's removal of its super-easy monetary policy, which has pushed up market interest rates.

Effective Monday, the bank will raise interest rates on 1-month to 10-year time deposits, currently set between 0.02 percent and 0.25 percent to 0.02 percent to 0.55 percent, public broadcaster NHK said.

Cool. how long till were at 1% do you think? BEARing in mind that it would be a 10fold increase in borrowing?

[Realistbear]

The DOW appears to have reacted to the news with an abrupt halt to today's trend line upwards.

This is going to have some interesting copnsequences as the market was beginning to price in a "cry wolf" scenario with the official B o J backing off. Some people are making a lot of money on bonds methinks.

[bazzzzzzz]

The rates to be increased are interest rates on deposit accounts. That's right isn't it?

[Realistbear]

The rates to be increased are interest rates on deposit accounts. That's right isn't it?

Right. Higher IR on deposits in anticipation of higher rates on loans. Can't lend money at a loss. The surprise is that they moved ahead of the B o J. This carry trade thing may happen notwithstanding the

B o J's dithering.

[Realistbear]

So what are the repercussions for the US$ once the FED ends its rate hikes and increases liquidity in ever greater amounts?

My guess is a recession of some magnitude.

The turnaround from hawkishness to dovishness is too fast for my liking and smacks of massive market manipulation. The bond markets would have had a heads up on CPI/jobs data which leads me to suspect someone is going to pull a coupe d' etat on the currency markets sometime soon. After all, the same recessionary problems plague Europe as the US which is, if anything, a lot healthier with IR far higher than the EU and about to be higher than the UK.

If it doesn't seem right it probably isn't. I wonder if George Soros and his pals have something working?

[needle]

...which leads me to suspect someone is going to pull a coupe d' etat on the currency markets.....

I think Coup d'Argent is the phrase youre looking for....(ahem)

[BoredTrainBuilder]

Now you're talking!

Rather than Soros. Could it be that the Yanks are trying to pull a fast one whilst hoping no one notices, and the Japs are saying, "hold on a cotton-picking minute! You're not gonna get out of what you owe us that easily!"?

The Americans are trying to stir up inflation via all means at their disposal including further military action, and the Japs believe now is the time to put a lid on things else their US holdings will be worth Jack $hit before too long.

Just a thought, and as you've rightly said, there's something very fishy about all of this...

Or, just possibly, Japan is coming out of its long-running depression and is acting accordingly.

Hope you don't feel bullied by this whiff of reality.

[Warwickshire Lad]

I don't know about anyone else, but I can't help feeling that all this talk about Japan, the Yen carry trade and a bank in Japan raising IRs by a miniscule amount is maybe a bit fanciful in relation to movements to UK house prices.

I've read some articles on this, and I can see where people are coming from, but hasn't this carry trade thing being talked about for ages ?

I'd like to hear a genuinely realistic scenario about what might happen here, and not a bearish wet-dream...

[Golden Shower]

I don't know about anyone else, but I can't help feeling that all this talk about Japan, the Yen carry trade and a bank in Japan raising IRs by a miniscule amount is maybe a bit fanciful in relation to movements to UK house prices.

I've read some articles on this, and I can see where people are coming from, but hasn't this carry trade thing being talked about for ages ?

I'd like to hear a genuinely realistic scenario about what might happen here, and not a bearish wet-dream...

Possibly, I would have to research it properly. The thing that concerns me is that the Japanese government will fight to keep the Yen low against the USD. Interesting hearing the news from Japan, the government and BoJ are in no hurry to raise rates. I would guess this is not only self-preservation but they also know that raisning their IRs could have serious consequences.

All IMO, of course.

[bazzzzzzz]

Right. Higher IR on deposits in anticipation of higher rates on loans. Can't lend money at a loss. The surprise is that they moved ahead of the B o J.

Got it. Now.

Thnx

Edited March 18, 2006 by Baz63

[keepwatching]

Im sticking my neck out here because i dont know anything about this really........

In response to WLs realist scenario.... 'The bearish wet dream'

Hasnt the 'cheap money from Asia' been a bullish 'orgasm' for the press ????

Edited March 18, 2006 by keepwatching

[boom_and_bust]

Hi,

If you can gain subscription assess to research consultancy group gavecal (www.gavekal.com/), checkout their current analysis of funds and central bank intervention, in particular the seemingly concerted and orchestrated activities now in the markets by the Fed, BoJ and ECB to clamp down on asset price speculation AND ... fears over increasing house prices in the west. Their work seems to point to a covert clamp down on credit and liquidity by those central banks over the past year with plenty more to come.

Boomer

Edited March 19, 2006 by boom_and_bust

[Realistbear]

Despite BoJ crying wolf (again) the IR direction remains unaltered--its all in the "liquidity" :

Observer: Bears and bulls,beers and newts

By David Pilling

Published: March 20 2006 02:00 | Last updated: March 20 2006 02:00

http://news.ft.com/cms/s/f0e579e8-b7b5-11d...00779e2340.html

It has been a momentous few days in Tokyo. Short-term interest rates, for years pegged at zero, have quite suddenly taken a shocking turn following an unprecedented shift in Bank of Japan policy. In the central bank's words, interest rates will now be kept at "effectively zero" for the foreseeable future. Observer can see what all the hoopla is about.

That misses the point. The really significant change, as any monetary policy wonk will know, is the end of an arcane policy called quantitative easing. Under this regime, the bank has spent five years creating huge amounts of liquidity, which the commercial banks have studiously ignored. Consequently, oodles of cash has piled up in its vaults.

One economist compared the policy to lining up dozens of beers and offering them to a man already so drunk he was retching into a paper bag. Another said quantitative easing was incredibly sophisticated, akin to throwing newts into a pool of boiling water and chanting.

Clearly, removing the unwanted beers and cancelling the newt-tossing exercise has been more than the system can bear. You only need to look at the startled reaction of bond yields, which have leapt on the news. Oh, the rationality of markets.