J.P. Morgan Asset Management: Bank of Japan to raise interest rates again depends on the "mood" of the U.S. economy
JPMorgan Asset Management stated that the Bank of Japan will avoid raising interest rates again in the short term, and further policy tightening may depend on the fate of the US economy. The company is one of the institutions predicting the Bank of Japan's next policy move. Market turmoil has intensified conflicting views on Japan's policy path, with traders lacking confidence in the possibility of a rate hike by the Bank of Japan. JPMorgan estimates that the Federal Reserve will not further tighten monetary policy until 2025. The Bank of Japan's actions will depend on the stability of the global economy and the avoidance of recession
According to the Zhitong Finance and Economics APP, Morgan Stanley Asset Management 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 U.S. economy.
Seamus Mac Gorain, Global Head of Rates at the company, said, "The Bank of Japan actually has ways to take action again, but this is the path of the Fed cutting rates, and they have indeed managed to stabilize the U.S. economy," "If we fall into a recession, of course, they are done now."
Morgan Stanley Asset Management is betting that the company will profit when the yield spread between short-term and long-term Japanese bonds narrows. After a week of intense trading, the company is also one of the institutions predicting the Bank of Japan's next policy moves.
Contradictory views on the Japanese policy path have intensified market turmoil, with arbitrage trading taking a hit, affecting various areas such as credit, stocks, and government bonds.
Among 34 economists, about 65% believe that the Japanese policy interest rate will be raised again before the end of the year. Traders lack confidence: the forward market estimates a 30% chance of a 25 basis point rate hike before December, down from around 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 raise rates in a series, but this will depend on whether the global economy is at a relatively moderate level."
Previously, the yen against the dollar soared to 141.70 on Monday, while traders were struggling to cope with the Bank of Japan's tough rhetoric. Less than 48 hours later, the yen against the dollar fell to 147.90, with the Japanese deputy governor stating that Japan will not raise rates if the market is unstable. During the same period, government bond prices first plummeted and then rebounded.
"It is clear that the Bank of Japan will not take action unless the market stabilizes," said Mac Gorain in London. "This definitely depends on whether the U.S. and global economies can avoid a recession."