No surprises here...
Both the Fed and BOJ did exactly what everyone expected them to.
The BOJ is staying the course with its QE program, but announced that it'll be targeting a zero yield on 10-year bonds (they were negative before) with the aim of steepening the curve.
The Fed stayed put on rates, but said they plan to hike before the end of the year (i.e., December), emphasising that they really, really mean it this time.
US markets (SPY) rejoiced, with small-caps (IWM) leading the advance, while the dollar (UUP) sold off.
Here are some quick takeaways.
Below is why the BOJ wants a steeper yield curve. The chart shows Topix banks and the spread between the 10-year and 2-year Japanese bonds. A steeper yield curve means more profits for banks.
(click to enlarge)
The BOJ's move away from negative interest rates on the longer end is a tacit… Read More …