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On December 25th, demand at the Japanese two-year government bond auction was below the 12-month average, as markets speculated that the Bank of Japan might need to raise interest rates more sharply to control inflation and support the yen. A key indicator of demand, the bid-to-cover ratio for this auction was 3.26, lower than the 12-month average of 3.65. Less than a week earlier, the Bank of Japan raised its policy rate to a 30-year high. Governor Kazuo Ueda offered little guidance on the central banks future interest rate path in his post-meeting remarks, leading to a weaker yen and a sharp rise in yields. The yield on two-year government bonds, more sensitive to monetary policy expectations, climbed to its highest level since 1996 earlier this week. Meanwhile, the 10-year breakeven inflation rate (a key indicator of market expectations for future price pressures) jumped to its highest level since 2004 on Monday. Nevertheless, the yens depreciation and rising yields have calmed since Finance Minister Satsuki Katayama warned earlier this week that Japan could "act freely" and take bold action against exchange rate fluctuations that are not in line with fundamentals. Investors will be watching the government bond issuance plan related to the fiscal year 2026 budget, which is expected to be approved by the cabinet on Friday.The yield on Japans two-year government bonds rose 1 basis point to 1.11%.Japanese Prime Minister Sanae Takaichi: I hope that companies will achieve a basic wage increase that exceeds the rate of inflation.Market news: Japanese Prime Minister Sanae Takaichi said that US tariffs have caused uncertainty in the supply chain.The bid-to-cover ratio for Japans 2-year government bond auction was 3.26, compared to 3.53 during the last issuance in November.

Global Markets Slump As The US Bans Russian Oil, Gold Rises

Aria Thomas

Apr 01, 2022 10:19

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The US imposes a ban on Russian oil

President Joe Biden of the United States put a ban on Russian oil and gas imports on Tuesday, ratcheting up the pressure on Vladimir Putin after his invasion of Ukraine late last month.


The UK likewise made a similar action, announcing that it will begin reducing its imports of Russian oil and associated items. By the end of the year, Britain is projected to have phased out all Russia-related oil imports.


According to one analyst, a ban on Russian oil by the EU would be a significant blow.

While the US and UK actions are substantial, one geopolitical risk expert told Reuters that the EU ban would be the most severe blow to Russia.


According to the researcher, Europe is "relatively reliant on Russian energy supply," and a complete exit from the alliance would mean economic devastation for the nation.


However, as President Biden emphasized, the choices are not free as energy prices continue to rise and everyday people feel the pinch at the pump.


The news of the Russian oil ban boosted oil prices, with worldwide benchmark Brent crude reaching highs of more than $131 per barrel.


The West Texas Intermediate (WTI) crude oil price increased more than 7% in response to Biden's remarks, breaking beyond the $130 per barrel barrier. However, the US benchmark's surge to a 13-year high was short-lived, with the market closing at roughly $123 a barrel.

Gold continues its run, as nickel reaches $100,000 per ton.

Gold prices surged to session highs earlier in the afternoon as investors sought refuge in the precious metal. Due to the widespread risk-off mentality, spot gold increased more than 3% to $2,069.89 per ounce. Gold reached an all-time high of $2,072.50 in August 2020.


In other market news, nickel prices reached $100,000 a ton on Tuesday, prompting the London Metal Exchange (LME) to stop trading due to claims of short-covering by one of the world's biggest nickel producers.

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