A look at the day ahead in Asian markets from Jamie McGeever.
chartAlthough the MSCI Asia ex-Japan index fell and yields on U.S. Treasuries and other government bonds rose on Tuesday, the MSCI World index andYet investors will surely be forced to rethink their 2023 strategies. The implications of the world's most dovish central bank turning hawkish are too big to ignore.
Japan is the world's largest creditor country, meaning there is a vast pool of cash potentially waiting to come home to higher rates of return., the difference between the stock of assets it holds overseas and stock of Japanese assets held by foreigners, is more than $3 trillion. An effective doubling of Japan's long-term risk-free rate to 0.50% will turn some domestic investors' heads. And with Japan's portfolio investment assets and liabilities totaling $7.3 trillion, big yen moves could spill over to global leverage, hedging and derivatives exposures.Investors have a couple of days to digest Haruhiko Kuroda & Co's bombshell before the November's inflation report is released on Friday.
Inflation has exceeded the BOJ's 2% target for seven straight months as of October, and is expected to have risen to a newAs Washington-based consultant and former World Bank economist Philip Suttle notes, Kuroda can justifiably claim to have ended deflation. Over his 10-year tenure as BOJ governor, consumer prices have risen an average 0.77% year-on-year, compared with average 0.13% decline in the decade before.
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