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The boj how to achieve control of the yield curve? Goldman sachs also don't understand

by:Deyuan      2020-12-23
Yesterday the bank of Japan to rob before the fed's & other; Make a big news & throughout; , although not a cut, also did not expand the scale of the QQE and etfs, but the bank offering out & other; The yield curve control & throughout; This new weapons, and cancel the bond purchases the average maturity of the target.

but the 10-year Japanese government bond yields control at near zero, while maintaining the original purchase target ( 80 trillion yen) The same, the two contradictory in essence. Even Goldman sachs of the bank of Japan expert Naohiko Baba all don't understand, the bank of Japan to how to control the yield curve.

the JGB market has become increasingly distorted, Baba said.

& other; It is not clear, the bank of Japan in the future to how & lsquo; Control & rsquo; The yield curve. Only from the official announcement, we believe that the bank of Japan will temporarily yield curve more or less maintained at current levels. However, the question is how do they control the overall level of the yield curve, and the financial and economic environment change in the future when shape curve. The Japanese government bond market need time to understand the will of the bank of Japan, so gentle and the interest rate fluctuations we believe interest rates as to reflect the pricing function of the real economy and the financial environment will further loss. ”

statement on the bank of Japan yesterday, Goldman sachs gave his opinion, they think the bank of Japan has begun & other; Secret to cut the purchase & throughout; .

the boj emphasizes own there are four kinds of optional loose way: 1, the excess reserves of financial institutions in the central bank to implement negative interest rates ( Short-term policy rates) ; 2, the 10-year yields ( Long-term interest rates) ; 3, to expand asset purchases; 4, expanding the monetary base. The bank of Japan will continue to implement - 0. Interest rate of 1%, at the same time, buying Japanese bonds for a long time, so that we can maintain long-term interest rates at zero. We think that the bank of Japan's goal is to control the two interest rate target to control the yield curve, and the introduction of new market operation, as interest rates rise when the buffer. The bank of Japan decided to temporarily maintain a JGB purchases annual rate of about 80 trillion yen, but actually has rejected the previous goal in the monetary base.

the bank of Japan governor, Mr Kuroda would deny that, of course, but we think that the introduction of the yield curve control may be regarded as shrink JGB buying pave the way for the future. We believe that the very likely scenario is, through the substantial change, the framework of the bank of Japan to attract attention of the yield curve control, and then slowly shrink bond buying scale at the back. But due to technical reasons, the bank of Japan is more and more difficult to maintain a large number of Japanese government bond purchase programme, expand the Japanese bonds to buy marginal revenue has dropped, this is also our previously mentioned again and again. Many market participants expect, however, based on the ratio of the two countries in the monetary base rate, reduce the purchase clear there is a big risk. So we believe that the bank of Japan to believe it will need to shift the focus ahead of time. As soon as possible Exit from easy measures is still far, however, the bank of Japan needs to be accompanied by policy to minimize the impact caused by the transfer of the target market, and let loose system for a long time, more sustainable.
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