Full-Scale BOJ Easing, Delay in Sales Tax Seen by Morgan Stanley
Source: BFW (Bloomberg First Word)
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(Bloomberg) -- Morgan Stanley expects “full-scale 3-dimensional easing” of quantity, quality and interest rates, according to April 25 note.
Alert: HALISTER1- Cites following factors: BOJ has lowered its assessment of economy; yen has strengthened; earthquakes have damaged Kumamoto; price expectations have worsened; spring wage negotiations have amplified downside risk to prices
- New BOJ policy will probably expand monetary-base target to 90t-100t yen from 80t yen; boost purchases of ETFs, JGBs, and J-REITs; and start buying municipal bonds and perhaps corporate debt
- A rate cut is also likely, from -0.1% by at least 10 bps and perhaps 20 bps
- Also expects a postponement of scheduled sales-tax hike
- Says if BOJ meets MS’s expectations, Japan’s 20-yr govt bonds likely to outperform in a rally
- Sees “tactical risks” for higher USD/JPY but recommends selling into this strength post-BOJ; says yen is the most fundamentally undervalued among G-10 currencies
Source: BFW (Bloomberg First Word)
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UUID: 7947283