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On May 18th, Ed Yardeni, president and chief investment strategist of Yardeni Research, stated that as investors become increasingly concerned about inflation, the Federal Reserve needs to keep pace with the bond market or risk losing control over borrowing costs. He pointed out that given the current market environment is "no longer" suitable for an accommodative stance, the Fed should remove its dovish bias at its June meeting. "If the Fed fails to remove this bias, investors will conclude that the Fed is lagging behind the inflation curve and will demand a higher inflation risk premium," Yardeni said. "We expect the Fed to keep interest rates unchanged at its June meeting and shift to a tightening policy stance." Yardeni added that the current economic context no longer provides a reason for an accommodative bias, let alone rate cuts. Instead, he believes that a more hawkish Warsh than the market expects could actually benefit Trump by helping to suppress long-term Treasury yields.According to the National Bureau of Statistics, the price of second-hand residential properties in Shenzhen rose 0.3% month-on-month in April (up 0.4% in the previous month) and fell 6.5% year-on-year (down 7.0% in the previous month).According to the National Bureau of Statistics, the price of newly built commercial residential buildings in Shenzhen rose 0.1% month-on-month in April (compared to 0.2% previously) and fell 5.3% year-on-year (compared to -5.5% previously).According to the National Bureau of Statistics, the price of second-hand residential properties in Guangzhou in April increased by 0.2% month-on-month (previous value: +0.2%) and decreased by 7.9% year-on-year (previous value: -8.1%).According to the National Bureau of Statistics, the price of newly built commercial residential buildings in Guangzhou in April increased by 0.1% month-on-month (previous value: +0.3%) and decreased by 4.4% year-on-year (previous value: -4.7%).

As the BoJ ponders a YCC expansion, EUR/JPY continues to decline, falling below 142.60

Alina Haynes

Apr 06, 2023 11:52

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After plunging below 142.60 during the Asian trading session, the EUR/JPY pair's three-day losing trend was extended. Renewed rumors of an expansion of the Bank of Japan's (BoJ) Yield Curve Control (YCC) are exerting immense pressure on the cross.

 

The Japanese economy is experiencing gradual wage growth, and inflation is expected to respond to recent increases in crude oil prices. Analysts at Wells Fargo believe the BoJ will take advantage of a tactical opportunity to further modify its policy settings in the fourth quarter of 2022, and are inclined toward a meeting in October. They added that this timeframe is optimal for a smooth policy adjustment, as monetary easing from the Federal Reserve (Fed) and other major central banks should alleviate yield pressure.

 

In particular, the Bank of Japan (BoJ) will raise the target yield for 10-year Japanese government bonds (JGBs) from 0% to 0.25% and increase the tolerance interval surrounding this target to +/- 75 basis points.

 

Accelerating PMIs in the Eurozone provide support for the European Central Bank's sustained rate hikes. (ECB). S&P Global reported a Composite PMI of 53.7 on Wednesday, which was higher than the previous release of 52.0 but below expectations of 54.1, the highest level in the past ten months.

 

According to Reuters, S&P Global issued the following statement: "Manufacturing production increased slightly, but the service sector had the greatest impact on March's accelerated growth."

 

Wednesday, ECB policymaker Boris Vuji stated regarding interest rate forecasts, "The majority of the rate-hiking cycle has passed." He added, "We may require additional rate increases to address core inflation."

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