JAPAN

[rffrydr]

Core rate up .5%; 3 in a row:

"Mitsubishi UFJ Securities senior strategist Naomi Hasegawa said remarks this morning by Prime Minister Junichi Koizumi fueled conjecture that the central bank will soon end its present policy.

'[Changes in] consumer prices are coming in above zero and we are seeing signs of getting out of deflation,' Koizumi told a parliamentary committee.

His comments were his most positive yet on recent indications that the economy is winning its battle with falling consumer prices. Previously, Koizumi had insisted that it was too soon to say that the economy was coming out of deflation."


Bonds and stocks were short going in. End-of-day showed resiliency, (complaceny?)

Hey Henry, Devil's advocate: with Japanese debt at a Godzilla-sized 160% GDP on the worlds fastest aging population (and most afraid of foreign workers) do they have any choice BUT to reflate their way out? And politicians want a decade for "reforms."

An end to quantiative easing may be announced at the end of Japanese Fiscal Year--but this could take a long, long time to play out. Markets 1st "verdict."
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

They can sell yen.....lotsa lotsa yen.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Still waiting for Japan to announce some kind of substantive policy. At this point - shorting of purchasing stocks or actual houses - I don't see anything else they could do in the short-run.
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Japan plans low-interest mortgage in stimulus -Nikkei Reuters - Sunday, December 6

TOKYO, Dec 6 - Japan's government will offer a low-interest mortgage programme next year to homeowners taking out fresh loans from a state-backed lender, to boost housing demand as part of economic stimulus efforts, the Nikkei business daily reported on Sunday.

About 260 billion yen will be earmarked for the program in an extra budget for the year to next March, expected to be compiled this week to fund the stimulus.

The government, in power for a little more than two months, is desperate to avoid another recession in an economy already mired in deflation, ahead of an upper house election in summer.

The dominant Democratic Party of Japan was seeking fiscal spending of 7.1 trillion yen, comprising 4 trillion yen in immediate spending and 3 trillion yen in tax grants to local governments. [ID:nBNG460798]

Under the mortgage programme, homeowners taking out 35-year loans from the Japan Housing Finance Agency will have the mortgage rate cut by 1 percentage point for the first 10 years, from a fixed annual interest rate of 2.6 percent on the loan.

The discount rate will be available through next year for those who purchased homes designed to be energy efficient, quake resistant, or accessible to handicapped and elderly.

The Japan Housing Finance Agency charges a fixed annual interest rate on the loan, developed jointly with private lenders. The discount rate by the state-backed body may draw criticism from private lenders, the Nikkei said.

Many people are taking out adjustable-rate mortgages from private banks because they have to pay only about 1 percent interest amid a super-easy monetary policy, it said.

[rffrydr]

Selling Yen is only thing left they can do that isn't half-hearted. It goes against the new administration but they can cover it as punishing "manipulation." Perversely the "Yen-day sales" has perked up retail.

I'm taking another look at JOF.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

The Bank of Japan is expected to keep on pumping liquidity into the economy. No half-hearted efforts will be worth going through at this point.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPGMn6wbjszA&pos=6

Also looks like Einhorn isn't much of a global macro trader, as 10-year JGB yields continue to decline.

[HenryTo]

This move by the Bank of Japan should add some marginal liquidity to the financial markets, and is especially bullish for Japanese equities. The $64 billion question: Is this sufficient in any sense of the word?

http://www.nytimes.com/2009/12/02/business/global/02yen.html

[rffrydr]

I never did buy into that Tokyo privileged property recovery couple years back. Here's the "real japan" where you too could be the proud owner of a mountain getaway for less than honda civic--complete with the fluorescent colors of the boom:

http://www.ft.com/cms/s/a3495cfc-d49b-11de-a935-00144feabdc0.html
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Topix bank index came within 5% of March lows but rallied out of hole last night.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

[HenryTo]

Just like clockwork, Japanese government bonds bounce back:
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JGB futures rally to 3-wk high on solid 5-yr sale
Reuters - 1 hour 17 minutes ago
* 5-yr JGB auction draws solid demand, offsets fiscal worries

* 10-yr yield down 10.5 bps from 5-mth high hit this week

By Shinichi Saoshiro

TOKYO, Nov 11 - Japanese government bonds rallied on Thursday, with 10-year futures jumping to a three-week high, as the market took heart in the solid results of a five-year debt sale after a string of poorly received auctions.

The 2.4 trillion yen five-year auction helped allay concerns over Japan's fiscal situation that had sent the benchmark 10-year yield to a five-month high earlier in the week.

The auction's bid-to-cover ratio, a gauge of demand, rose to 3.7 from 2.17 at the previous auction in October and was the highest since the September tender. The tail, the difference between the lowest and average prices and used as another gauge of an auction's success, tightened to 0.02 from 0.04. <TENDER01>

"Recent JGB selling had gone a little too far," said Nobuto Yamazaki, a fund manager at DIAM Asset Management.

"Investors are still worried about what next year's budget will look like, but if the government can pull it together and keep bond issuance somewhat under control, then the market will settle down and yields could pull back even further."

December 10-year futures jumped 0.48 point to 138.34, having hit a three-week high of 138.38. They touched a three-month low of 137.29 on Monday.

The two-year yield dipped half a basis point to 0.250 percent <JP2YTN=JBTC>. The five-year yield <JP5YTN=JBTC> fell 2.5 basis points to 0.685 percent.

The benchmark 10-year yield fell 4.5 basis points to 1.380 percent, pulling sharply away from a five-month high of 1.485 percent struck earlier in the week.

The more than 10 basis-point slide in the benchmark 10-year yield this week was initiated by comments by officials earlier in the week that the government must ensure its spending plans did not rattle bond investors' confidence. [ID:nT218318]

The two- to 10-year yield spread tightened by 4.5 basis points to 113 basis points according to Reuters data. It hit a 3-� year high of 121 basis points earlier this week.

[rffrydr]

I'd fade that. 2.5 X GDP debt is only a guide. Pulling the plug on Postal System privatization will lock gargantuan liquidity into JGBs in this original asian surplus nation. Not a blip in the yen shows that "investors" just don't matter. Wonder how Jimmy Rogers is reconciling this insult to his asiantics?

Ironically the "sclerotic" japan, is also its stabilizer: the elderly don't spend with a splash but they do spend. And on fixed incomes they spend freely and regularly, economy be-damned. The ceiling is the floor. Meanwhile the economy is chugging along despite the extreme pressures put on exports from the yen. Remember the "great hollowing out"? Well that's yen-free production.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

In the meantime, CDS on JGBs have continued to spike. Could this be the "Einhorn Effect?"

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6480289/It-is-Japan-we-should-be-worrying-about-not-America.html

[rffrydr]

So they all like to say we are like japan...and then turn and run to gold on a projected inflation scare.

In a refreshing turn this guy sees china in japan:

http://www.ft.com/cms/s/0/39f61cb6-c818-11de-8ba8-00144feab49a.html

[rffrydr]

The "liberalization" of Japan Post was one of the foundations of the bull market of the last decade. Now, the concept of "investment" itself is changing.

http://ftalphaville.ft.com/blog/2009/10/21/78911/samurai-dramas-at-japan-post/
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

GavKal exasperated on under(non) performance of japan. Looking for some new catalyst.

Really this just underscores how much a liquidity phenomenon this is. Mrs. Wananabe is not interested in the TOPIX and the foreign devil can't deal with the water torture. Their banks threw away their balance sheets. Even the cowboy hedgies have failed to stir anything up. It's an island fortress....it's a monolith. Nikkei 40,000 had as much to do with a sublimated nationalism/demographic as anything and they're not going back.

A catalyst? Dollar carry
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Tokyo Auto Show RIP: foreign cars less than 5% of market "cleverly" closed to foreign manufacturing plants.

http://www.freep.com/article/20091001/COL06/910010481/1014/BUSINESS01/Foreign-car-brands-skip-Tokyo-show
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Today is the Tomorrow you worried about Yesterday!