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Bond markets react to Governor Ueda’s comments

On Monday morning, Bank of Japan Governor Ueda said in an interview with the Yomiuri Shimbun newspaper, “Lifting negative interest rates,
The market reacted to Bank of Japan Governor Ueda’s statement in an interview with the Yomiuri Shimbun newspaper that “lifting negative interest rates is an option if there is confidence in rising prices”. The yen strengthened from early morning,
The yen strengthened early in the morning and temporarily fell to 145.90 yen.

The statement was accompanied by the proviso that “even after the lifting of negative interest rates, if it is judged possible to achieve the price target”,
The market was hopeful that “there is no possibility that sufficient information and data will be available by the end of the year”.
The 10-year interest rate on Japanese government bonds, which reached the 0.7% level, also supported the appreciation of the yen.

However, this statement was strongly meant to check the strengthening of the yen, and if the yen were to strengthen, the tone of the interest rate hike would weaken.
The reaction is mainly from overseas, and I don’t know how sustainable it will be, but there is also the verbal intervention of Treasurer Kanda of the Ministry of Finance,
The one-way depreciation of the yen has been halted for the short term.

However, the effect of this has quickly worn off, and the dollar has now strengthened against the yen to around ¥146.85.
The US Consumer Price Index event is due today, and it appears that investors are adjusting their positions ahead of this event.

According to a recent article by Nick Timiraos in the WallStreetJarnal, the Fed appears to be cautious about raising interest rates.
This may be why US stocks and other commodities closed higher the day before yesterday. However, in the currency markets, the dollar is rather being bought.

Although it is difficult to expect a major move ahead of the US CPI, the dollar is short the yen due to yesterday’s news from Governor Ueda.
Short-covering should be noted.