JPMorgan Asset Management stated that the Bank of Japan will avoid another interest rate hike in the short term, and further tightening of policy may depend on the fate of the US economy.
JPMorgan Asset Management has stated that the Bank of Japan will avoid raising interest rates again in the short term, and further tightening of policy may depend on the fate of the US economy.
The company's global rate manager, Seamus Mac Gorain, said that "there is actually a way for the Bank of Japan to take action again, but it is through the Fed's interest rate cut, and they have indeed managed to stabilize the US economy," if we fall into a recession, of course, they are done now."
JPMorgan Asset Management bets that when the yield spread between short-term and long-term Japanese bonds contracts, the company will profit. The company is also one of the institutions that predicted the next policy measures of the Bank of Japan after a week of intense trading.
The conflicting views on Japan's policy path have intensified market volatility, hitting arbitrage trades and affecting various fields such as credit, stocks, and government bonds.
Of the 34 economists, about 65% believe that Japan's policy interest rates will rise again before the end of the year. Traders lack confidence: the probability of a 25 basis point rate hike before December in the swap market is about 30%, lower than about 60% a week ago.
Mac Gorain estimates that the Fed will not further tighten monetary policy until 2025. He said in an interview: "The Bank of Japan may conduct a series of interest rate hikes, but this will depend on whether the global economy is at a relatively moderate level."
Earlier, the yen against the dollar soared to 141.70 on Monday, while traders were trying to cope with the Bank of Japan's tough rhetoric. Less than 48 hours later, the yen against the dollar fell to 147.90, and the deputy governor of Japan said that if the market is unstable, Japan will not raise interest rates. During the same period, the government bond prices first plummeted and then rebounded.
"Obviously, the Bank of Japan will not take action unless the market stabilizes," Mac Gorain in London said. "This certainly depends on whether the US and global economies can avoid a recession."
Editor/ping