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Bank Of Japan Losing The Battle As Liquidity Decreases

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http://news.ft.com/cms/s/ed70aa8e-eeed-11d...00779e2340.html

With overnight rates starting to jump in May, the market is going to start speculating that a rate hike will come in June

Mr Taya said there was evidence that most demand for overnight money was coming from foreign institutions. “I suspect this is related to the carry trade,” he said, referring to the practice of borrowing money cheaply in Japan and investing it in higher-yielding assets abroad.

Mr Taya said everyone had been surprised at the speed with which the overnight call market had come to life. Most observers, including many central bank officials, had expected the overnight rate to stay pegged close to zero until liquidity had fallen to Y8,000bn, he said.

In fact, as soon as liquidity levels dropped below Y13,000bn last week, rates began to rise rapidly towards 0.1 per cent. When the BoJ ended its ultra-loose policy in March, liquidity was above Y30,000bn, providing enough free overnight money for anyone that wanted it.

Japan is losing the battle. Their hand is being forced. Interest rates may have to rise to 0.25% very soon (i.e. next month!) and this is going to hit everything imaginable - equities, commodities, house prices.

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http://news.ft.com/cms/s/ed70aa8e-eeed-11d...00779e2340.html

Japan is losing the battle. Their hand is being forced. Interest rates may have to rise to 0.25% very soon (i.e. next month!) and this is going to hit everything imaginable - equities, commodities, house prices.

The warning came on 20th March 2006 when the Japs began tightening. The markets have had a long time to sell off IR sensitive assets so anyone caught short when reality hits has only themselves to blame. The warnings are out there--DO NOT underestimate the impact of credit tightening by Japan. Their money has been underpinning Gordon's Miracle Economy and it is about to get expensive (realistic).

http://mdn.mainichi-msn.co.jp/business/new...0bu012000c.html

Nearly half of financial market experts expect the Bank of Japan to raise interest rates from almost zero in July, according to a joint survey by Jiji Press and Reuters released Monday.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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