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Boj Going To Raise Rates Next Week?

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Soooooo many conflicting views as to what is going to happen next week for BOJ. Economics is the best job in the world. You can get things wrong so many times and get away with it.

If i did that in my job i wouldn't have one.

So considering we have so many fiscal, economically minded people here what is your view and try and back it up.

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This is a tough question.

Up until a few weeks ago I would have said they will hike rates to 0.25% ish, but since the Governor of the BOJ ran into trouble over his private investments, and the politicians started to pile the pressure on I am not so sure. I think there is a possibility that they will put the hike off until August.

Having said that I think that the odds are about 60-40 in favour of a hike this month.

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I'm off the opinion that interest rate expectations are more significant than the actual rates as investment decisions are forward looking. To this end the BoJ did a great job 3-6 months ago of forewarning the world than the ZIRP would be coming to an end in the short term. Hence the volatility in emerging markets around April and the actual timing of the rise is less significant as it is already priced in. Providing it happens at some point in the near future confidence will be maintained.

As regards when it will happen, I think that it depends on other factors. The Japanese have been spooked by N.Korea lobbing missiles towards them and I think are reluctant to raise rates until all is calm. The rise will happen, but not methinks, this month.

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Dont you think the timing of exposing the gov's private financial affairs is somewhat fishy? After all, a lot of peeps make a lot of money from the current situation.

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Jap bond market may dictate:


TOKYO (XFN-ASIA) - (Repeating to clarify last par to read 'may not be in the offing')
Japanese government bond (JGB) prices finished mixed as
rising expectations for an end to the Bank of Japan's (BoJ) near zero interest rates at its policy meeting next week superseded early gains driven by a sharp slump in equities, dealers said.
The yield on the benchmark 10-year bond ended at 1.975 pct, down from 1.980 pct at the close yesterday, while the yield on lead 20-year bond fell to 2.340 pct from 2.350 pct previously.
But the yield on the lead 30-year bond rose to 2.605 pct from 2.600 pct while the bellwether five-year note yield also moved up to 1.510 pct from 1.505 pct, and the two-year yield to 0.900 pct, from 0.890 pct yesterday
Bond prices move inversely to yields.
The price of the 10-year bond futures contract edged down to 130.90 yen from 130.99 yen yesterday.
"The JGB market was largely directionless today ... while some investors chased bargains, worries over an imminent end to the BoJ's current zero rate policy weighed on the prices of short-dated paper," said Ryutaro Matsuyama, a strategist at Mizuho Investors Securities.
He said some late selling pared morning gains that were inspired by weak equity prices.
In stocks, the Nikkei 225 index closed down 1.3 pct, while the broader TOPIX of all First Section issues fell 1.1 pct.
The BoJ policy board meets on July 13-14 and
there are increasing expectations, fuelled by an upbeat Tankan survey result this week, for the board to allow an upward shift in the overnight call rate,
ending the bank's five-year stance of guiding rates at around zero percent.
Matsuyama noted that if the BoJ hikes the overnight rate by around 25 bps at next week's policy meeting but signals that further increases may not be in the offing, longer term bond buyers may then move to bargain hunt, providing the broad market with some mild support.

Imbalances have only just begun to unwind and the stock market corrections are at the very outer edge of the storm. There is more to come and a lot stronger than we have seen to date.

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