Summary: The Bank of Japan released its Oct 12-13 Monetary Policy meeting minutes today, in which its outlook for the economy to (likely) "expand moderately" and for "gradual" rate hikes is reiterated. A majority of economists don't expect a follow-on rate hike at the BoJ's next meeting Dec 19th. BoJ Governor Toshihiko Fukui has said he wants to act "in advance" to prevent any overheating in corporate capex and real estate investment, but he doesn't feel there's an immediate inflation threat. The yen is expected to remain weak and trade between ¥117.5 and ¥118.8/US$ this week. The latest government data shows Japanese investors bought ¥924b ($7.8 billion) in foreign bonds and notes during the week-ended Nov. 11. With short-term interest rates in Japan at 0.25%, overseas rates are very attractive for Japanese investors. A further widening of rate spreads, especially against the euro, could put more pressure on the yen.
Related links: BoJ Oct. 12 and 13 Policy Meeting Minutes. [pdf] Media coverage: Bloomberg and IHT. Commentary: BoJ Keeps Target Interest Rate at 0.25% • Japan's Q3 GDP Surprises to Upside, Stocks Rebound • Significance of the Surprisingly Weak Yen • Which Currency ETF is the Best Hedge Against the Dollar?.
Potentially impacted stocks and ETFs: Canon (NYSE:CAJ), Honda (NYSE:HMC), Matsushita (NYSE:MC), Nintendo (OTCPK:NTDOY), Nissan (OTCPK:NSANY), Sharp (OTCPK:SHCAY), Sony (NYSE:SNE), Toyota (NYSE:TM) • ETFs: iShares MSCI Japan Index (NYSEARCA:EWJ), iShares S&P/TOPIX 150 (NYSEARCA:ITF), BLDRS Asia 50 ADR Index (NASDAQ:ADRA)
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