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- BOJ candidate Ueda speaks in Parliament for three hours
- Nikkei rose 1%; Japanese bond futures rise; yen volatile
- Dollar near 2-month high; Traders await US PCE data
SYDNEY, Feb 24 (Reuters) – Asian markets breathed a sigh of relief on Friday as the new governor of Japan’s central bank allayed fears of an imminent end to super-loose monetary policy, pushing bond yields lower around the world.
Kazuo Ueda, who will take over as Governor of the Bank of Japan (BOJ) in April, began a three-hour speech to Parliament at 9:30 am (0030 GMT), offering markets a first glimpse of the central bank’s new look could steer an exit from ultra-low interest rates. Continue reading
So far, Ueda has pledged to maintain ultra-loose monetary policy as inflation is yet to sustainably and steadily hit the central bank’s 2% target, and there has been little sign that he will quickly roll back the BOJ’s Yield Curve Control (YCC) policy would. Continue reading
“There were high hopes that Ueda would give the BOJ a hawkish turn, but early remarks in his confirmation speech say otherwise,” said Matt Simpson, senior market analyst at City Index.
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Ueda hearing in House of Commons takes place as markets renew their attack on YCC and bet on a near-term rate hike.
The five-year Japanese government bond yield fell slightly to 0.235% from the previous close of 0.240%. Ten-year bonds did not trade early on Friday due to low liquidity, but bond futures extended gains.
The Nikkei Stock Index (.N225) rose 1%.
The yen remained unsettled. It reversed an early rise and was largely unchanged at 134.71 per dollar.
“Overall, Ueda is working hard to present itself as a continuity — at least initially,” said Sean Callow, senior currency strategist at Westpac. “Now is not the time to put your own stamp on politics; that’s not why the government chose him.”
Data on Friday showed that Japan’s annual core consumer inflation hit a new 41-year high of 4.2% in January, keeping the central bank under pressure to end its massive stimulus program. Continue reading
Otherwise, stocks were mixed. MSCI’s broadest index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) slipped 0.2% and was heading for a 1.5% weekly decline.
Chinese blue chips (.CSI300) fell 0.4% and Hong Kong’s Hang Seng Index (.HSI) fell 0.9%, while Australia’s resource-rich stocks (.AXJO) gained 0.2%.
On Wall Street, stocks ended a tumultuous Thursday in positive territory, with the Dow Jones Industrial Average (.DJI) gaining 0.33%, the S&P 500 (.SPX) gaining 0.53% and the Nasdaq Composite (. IXIC) increased by 0.72%. . (.N)
Investors awaited the release of the January US Personal Consumption Expenditure (PCE) Index, the Federal Reserve’s preferred measure of inflation, on Friday. The index is expected to rise 4.3% yoy, compared to 4.4% in the previous month.
Overnight, strong data, including an unexpected fall in new jobless claims and a revised rise in the fourth-quarter PCE price index, indicated some strength in the economy.
The dollar index, which measures the safe-haven dollar against six peers, fluctuated at 104.63, not too far from a seven-week high of 104.78.
Government bond yields eased slightly on Friday. The benchmark 10-year Treasury yield fell as low as 3.8590% from the previous close of 3.8810%.
The two-year bond yield hovered at 4.6810% compared to the previous close of 4.6930%.
In the oil market, Brent crude futures were up 0.6% to $82.71, while US West Texas Intermediate (WTI) crude was up 0.7% to $75.90.
Gold was slightly higher. Spot gold was trading at $1825.13 an ounce.
(This story has been reposted to fix a typo in the headline.)
Reporting by Stella Qiu; Edited by Bradley Perrett
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