Taking QE to a Whole New Level
The Bank of Japan is taking the concept of quantitative easing to a whole new level. Unlike the Fed who is only focused on treasuries and agency MBS securities, the BOJ is authorized to purchase ETFs and REITs in addition to JGBs.
Reuters: - "The BOJ can buy whatever amount of ETFs and REITs it can. It can even buy government bonds more forcefully, as if it were to buy the entire amount in markets," Hamada said in an interview with Reuters.
"There are also other various measures, although the BOJ must also be mindful of the drawbacks."
According to Credit Suisse, the BOJ's balance sheet as a proportion of the nation's GDP will far outstrip that of the other major central banks (excluding the SNB) within the next two years. This is uncharted territory - nothing of this magnitude has been tried before in a developed economy. As a result, dollar/yen is at 99 (the yen is down some 25% over the past 6 months) and Japan's stock market just hit a 5-year high.
Source: Sober Look
About Sober Look
Sober Look Archive
|05/04/2015||Sentiment Shift on US Inflation Expectations||story|
|04/20/2015||Bank of Greece Expulsion From the Eurosystem Could Be Especially Damaging to the Currency Union||story|
|04/06/2015||Renewed Demand for Dollar Funding in the Eurozone||story|
|03/30/2015||Frenzied Speculative Activity in China's Equity Markets||story|
|03/16/2015||Stocks in China Soar as Hard-Landing Fears Resurface||story|
|03/10/2015||Global Commodities Under Pressure||story|
|03/06/2015||Debate Around the 2015 Rate Hike Intensifies||story|
|03/05/2015||An Update on Brazil’s Flagging Economy||story|
|03/03/2015||The Eurozone: On the Road to Recovery With a Lingering Risk||story|
|03/02/2015||China’s Rate Cut Insufficient: Investors Expect More PBoC Stimulus and Yuan Devaluation||story|