“The definition of insanity...
...is doing the same thing over and over again,
but expecting different results.”
On that note, the Bank of Japan (BOJ) went ahead and implemented the “QQE with Yield Curve Control” plan (i.e. a -0.1% policy rate and a centrally planned 0.00% 10yr Yield rate).
Q: WHAT’S THAT GOING TO DO FOR japan's ECONOMY?
Here's a quick breakdown of the BOJ's policy announcementt:
- BoJ to change maximum scale of each ETF buying operation
- ...to continue buying JGBs at ¥80T annually
- ...to conduct policy to influence interest rates
- ...to extend fixed-rate fund-providing operations to 10-yrs from 1-yr
- ...to begin fixed-rate JGB buying operation
- ...to increase monetary base until inflation goes above 2%
- ...adopts inflation-overshooting commitment
- ...scraps 7-12 year JGB buying duration period
- ...to use QQE with yield curve control
#Riveting, eh? Yep. A whole lot of nothingness emerged from the latest central-market-plan to literally not let the Japanese 10yr Yield move from 0.00%. With a policy rate of -0.1%, you’re going to need a microscope to see that Bad Sushi Yield Spread.
For more insight on Japan, take a look at our Senior Macro analyst Darius Dale's "The BOJ's Stench of Desperation."
Macro markets doing a big yawn post the BOJ event and I have to admit that some of the “rates are gonna rip” theories are quite clever at this point; not as P&L practical as simply getting #GrowthSlowing right in 2016, but definitely clever! US Treasury 10yr Yield immediate-term risk range = 1.55-1.75%. I’m a buyer of long-term bonds on any move > 1.70%
Editor's Note: The note above is from this morning's Early Look written by Hedgeye CEO Keith McCullough. Click here to subscribe.