Bank of Japan makes no change to rates, but notes ‘moderate recovery’ in economy
Japan’s central bank made no changes to its benchmark lending rate and yield curve control policy following its latest monetary policy meeting. The central bank kept rates at -0.1%, and capped the 10-year Japanese government bond yield around zero. This decision comes after the bank’s loosening of its yield curve control in July, allowing longer-term rates to move more in tandem with rising inflation.
According to the Bank of Japan, there has been a “moderate recovery” in the country’s economy, signaling positive growth. However, concerns arise as Japan’s private sector activity expanded at its slowest pace since February. Flash estimates from au Jibun bank show that the composite purchasing managers index for Japan in September stood at 51.8, down from August’s figure of 52.6. Manufacturing PMI figures also showed a faster contraction.
Inflation remains above the Bank of Japan’s target for the 17th straight month, with the August inflation rate at 3.2%. The core inflation rate, which excludes prices of fresh food, stood at 3.1%, slightly higher than expected. However, concerns remain about the country’s economic recovery, given the slower private sector activity.
In the US, individual investor bullishness has declined to a four-month low, according to the latest AAII weekly survey. Bearish sentiments have increased, with neutral sentiment also seeing a slight decline. This change in sentiment suggests that some investors may be concerned about the future of the stock market.
Ritholtz Wealth Management’s CEO, Josh Brown, suggests investors consider adding longer-dated Treasury exposure as bond yields turn higher. Brown advises locking in the current relatively high yields and not worrying about eventual rate cuts. This sentiment reflects the changing dynamics in the bond market.
Weight Watchers International, which recently purchased telehealth company Sequence, experienced a decline in shares after Oprah Winfrey expressed her reservations about weight loss drugs during an online panel. Despite this setback, the stock has seen significant gains since the beginning of the year.
Overall, the market is heading for another down week, with all three major averages posting negative sessions. The Dow, S&P 500, and Nasdaq Composite have all experienced declines throughout the week, raising concerns about the market’s performance.