The Bank of Japan suddenly "airstriked" the market.
On 7 December, Bank of Japan Governor Kazuo Ueda said that there are a number of options available to adjust the policy rate if the rate is raised, including raising the reserve interest rate of financial institutions at the Bank of Japan or reinstating the overnight lending rate. This statement is considered by the market to be a clear signal that the Bank of Japan has tightened monetary policy. Affected by this, on the morning of December 7, Japan's ** collective heavy fall, and the Nikkei 225 index once **17%。
At the same time, international oil prices have also collapsed. During the overnight U.S. stock market, the international market suddenly fell sharply, among them, WTI exceeded 4% in January to 69$38 barrel, the first time since the end of June** fell below the $70 mark, a cumulative decline of more than 27% from the year-to-date peak in late September. On the news side, U.S. gasoline inventories soared more than expected, triggering market concerns about weak demand.
Bank of Japan "air strikes".
The Bank of Japan appears to be one of the biggest risk points for global markets.
On December 7, Bank of Japan Governor Kazuo Ueda said in response to a question about the economy and guidance that the Bank of Japan will face a "more challenging" monetary policy next year.
He said that if the Bank of Japan raises interest rates, there are a number of options for adjusting the policy rate, including raising the reserve interest rate of financial institutions at the Bank of Japan or reinstating the overnight lending rate.
Kazuo Ueda also said whether to keep the interest rate at zero or raise it to 01%, and how quickly short-term interest rates will rise after the end of negative interest rate policy, will depend on economic and financial developments at that time.
This statement is considered by the market to be a clear signal that the Bank of Japan has tightened monetary policy. Affected by this, on the morning of December 7, Japan's ** collective heavy fall, and the Nikkei 225 index once **17%, the Topix index once fell more than 12%。
At the same time, the yen** rose against the dollar, rising to 146 at one point75。
For the Japanese economy, Bank of Japan Governor Kazuo Ueda said that the economy has recovered moderately and is expected to continue to maintain a moderate recovery momentum.
He further pointed out that inflation in Japan is expected to slow down in 2025, and that Japan's economic growth and prices are still facing very high uncertainties, and he is paying attention to the impact of the exchange rate on prices and the economy.
In fact, a clearer signal from the top of the Bank of Japan came from Deputy Governor Ryozo Himino.
He said that the Bank of Japan may soon end the world's last negative interest rate policy. Ryozo Himino came up with a hypothesis about what would happen if Japanese interest rates did become positive.
Subsequently, the deputy governor outlined the various potential effects that could arise after the Bank of Japan withdrew its massive stimulus measures.
He said the first rate hike since 2007 may not be as harmful as some feared, and if rates fall to positive territory, households could benefit from an improvement in net income, while the impact on the corporate sector could be limited. He also said that the financial system is resilient enough to cope with such a shift.
Previously, according to people familiar with the matter, Bank executives in Japan had called on the Bank of Japan to lift the negative interest rate policy when they met with the central bank** in November.
Ryozo Himino did not specify a possible timeline for the Bank of Japan to exit its negative interest rate policy. He said there is no preset timetable for this process, and the Bank of Japan carefully assesses the state of the economy before starting to withdraw.
Toshiyuki Kumagai, president of the Second Association of Regional Banks, said he hoped the BOJ would normalize policy when the time is right, according to people familiar with the matter who spoke on condition of anonymity.
Representatives of the BOJ's senior ** and regional banking associations, including BOJ Governor Kazuo Ueda, attended the meeting, according to people familiar with the matter. But a spokesman for the Bank of Japan declined to comment on the meeting, and the Japan Banking Association did not respond to a request for comment.
International oil prices suddenly collapsed.
During the U.S. trading session on December 6, the international market suddenly collapsed, among them, WTI fell 4 in January07% to 69$38 barrel, refreshing the low level of the front-month contract since June 27, and falling below the $70 mark for the first time since the end of JuneBrent closed down 3 in February75% at 74$30 barrel, the lowest level since June 28.
Compared with the peak of the year in late September, the cumulative decline of WTI*** in the United States is more than 27%, and the cumulative decline of Brent*** in London is more than 22% from the high point of the year.
Meanwhile, according to the American Automobile Association (AAA), as of December 6, the average gasoline** at gas stations in the United States reached 3$22, the lowest since January 3. New York Mercantile RBOB gasoline **also** over 37%。
On the news side, data released by the U.S. Energy Information Administration (EIA) showed that in the week ended December 1, U.S. gasoline inventories increased by 5.42 million barrels more than expected, much higher than the market expectation of 10270,000 barrels.
The previous day's data from the American Petroleum Institute (API) also showed that gasoline inventories rose by 2.83 million barrels, more than double market expectations.
Gasoline** is in decline ahead of the holiday shopping and travel season, raising concerns about the outlook for the U.S. economy. Market analysts believe that demand on the fuel side has been disrupted, and the market is currently more focused on demand than **.
Last week, several OPEC+ members announced that they would continue to voluntarily cut production in the first quarter of 2024, totaling 2.2 million barrels per day. However, the analysis pointed out that OPEC+ announced "voluntary production cuts" rather than "collective production cuts", reflecting its internal divisions and raising questions about whether "member countries will follow up and implement production cuts".
On 6 December, Russian Deputy Prime Minister Alexander Novak said OPEC+ could take further steps if last week's deal was not enough to balance the market. Novak joined Saudi Arabia's energy minister in reassuring the market that they could extend or even further increase production cuts.
Editor-in-charge: Luo Xiaoxia.
Proofreading: Ran Yanqing.
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