- Another Japan policy-response fails to hit the target
- European confidence improves, but at a slower pace
- UK consumer confidence reverses July decline
- Australian data suggests renewed buoyancy
- European issuance taken comfortable so far this week
- US income and spending data broadly in line
The market’s verdict on the Bank of Japan’s decision was pretty clear, with the yen substantially outperforming G10 currencies and being the only currency to strengthen vs. the USD on Monday. Furthermore, the Nikkei is down 3.5%, with exporters particularly hit on the fear that yen-strength is here to stay. One of the lessons from Japan over the previous 20 years, and there are many, is that policies, be they monetary or fiscal, rarely have the intended consequence. We saw that with attempts to recapitalise the banking system in an attempt to get it lending again. The focus now turns to the government’s fiscal package which is due to be announced at the end of next week. Fiscal policy also has a pretty chequered history in Japan, most notably with the late ‘90s consumption tax-hike which de-railed the fragile recovery. For now, markets are not prepared to give the government the benefit of the doubt...Read More
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