We are trying to remember when the last time the BOJ minutes were important for global risk assets, and are drawing a blank. That’s how messed up the financial markets have become. That said, here are the highlights from the BOJ’s May minutes which appear to have spooked the Nikkei some 10 minutes ahead of the open.
- HIGHER VOLATILITY MAY ACCELERATE JGB SELLING – Remember the “VaR shock?”
- CHINA ECONOMIC RECOVERY WEAKER THAN EXPECTED – Now it’s China’s fault?
- L-T RATE RISES DUE TO WEAK YEN, HIGHER OVERSEAS RATES – And higher overseas rates due to weak yen, also known as a Circular iteration
- CAPEX HOLDS KEY TO JAPAN ECONOMIC RECOVERY – That of the US too, and sadly there will be no CapEx under a centrally-planned ZIRP regime
- FLEXIBILITY OF POLICY SUFFICIENT ENSURED – By daily jawboning
- FEW MEMBERS: BOJ SHOULD WATCH FED POLICY EFFECT ON JAPAN YIELDS – We have several non-lemmings
- ONE MEMBER:MUST KEEP FISCAL DISCIPLINE TO ENSURE BOND STABILITY – And a dissenter
And perhaps that quotes that spooked the market:
- ONE MEMBER: TIMELINE SEEMED TO BE INCREASING BOND VOLATILITY – i.e., the longer it goes on, the more we lose control
- FEW MEMBERS: BOJ SHOULD WATCH FED POLICY EFFECT ON JAPAN YIELDS – Get to work, Mr. Chairman
Nikkei down 200 in minutes: