Bank of Japan's Christmas Surprise; RBA Mulls More Large Rate Rises By Perry Cleveland-Peck
Good day. Bank of Japan Gov. Haruhiko Kuroda is known for making moves that surprise the market and earlier today the central bank surprised nearly everyone by raising its effective cap on 10-year government bond yields to 0.5% from 0.25%. Market players had anticipated that time might be running out on the bank's low-rate policy, but they generally didn't expect Mr. Kuroda to move at the year's final policy meeting. As a result, the yen and bank shares surged, while both Japanese bonds and the local equity market sold off. U.S. stock futures wobbled before largely recouping their losses. Meanwhile, the Reserve Bank of Australia says it isn't ruling out larger interest-rate increases next year, according to the minutes of its meeting earlier this month. RBA board members are prepared to consider a range of options for Australia's cash rate when they next convene in February, including raising it by more than 25 basis points.
Now on to today's news and analysis.
Top News Bank of Japan Lets a Benchmark Rate Rise, Causing Yen to Surge
The Bank of Japan made a surprise decision to let a benchmark interest rate rise to 0.5% from 0.25%, pushing the yen higher and ending a long period in which it was the only major central bank not to increase rates.
The BOJ said the yield on the 10-year Japanese government bond could rise as high as 0.5% from a previous cap of 0.25%. The central bank has set a target range around zero for the benchmark government bond yield since 2016 and used that as a tool to keep overall market interest rates low.
Heard on the Street: The Bank of Japan Steals Christmas
Reserve Bank of Australia Says Larger Rate Rises Still an Option
The Reserve Bank of Australia could return to larger interest-rate increases in 2023 if inflation continues to stubbornly resists attempts to tame it, according to the minutes of their Dec. 6 meeting, published Tuesday.
U.S. Economy Rising Housing Costs Make It Harder to Be a Landlord
People thinking about becoming landlords might have a tougher time turning a profit after a year marked by higher home prices and mortgage rates. Rents are up too, but because of inflation so are repair and maintenance costs.
Majority of Americans Don't Expect Finances to Improve Next Year
About two-thirds of Americans do not expect their personal finances to improve next year, according to a new report by research firm Bankrate, which surveyed 3,656 U.S. adults last month. The biggest obstacle is inflation, according to the survey, which asked respondents to list reasons why they anticipate their personal finances won't improve next year. Additionally, respondents listed stagnant wages and debt as hurdles to ameliorating their circumstances. (Barron's)
Key Developments Around the World China PBOC Keeps Benchmark Lending Rates Unchanged
China's benchmark loan rates remained unchanged this month, according to a statement released by the central bank on Tuesday, despite more signs of weakness in the world's second-largest economy.
European Energy Ministers Agree to Emergency Gas Price Cap
European energy ministers agreed on an emergency limit for natural-gas prices, which have been sent soaring by the war on Ukraine, of 180 euros per megawatt hour on month-ahead prices on the EU's main trading hub.
Italy Found a Fix for Its Gas Crisis, but Locals Are Resisting Qatar Warns Brussels Bribery Allegations Could Hurt Energy Talks
Drones Strike Ukraine, Kyiv Scrambles to Restore Power and Heating
Russia launched a fresh wave of drone attacks against Ukraine on Monday as the country struggled to repair energy infrastructure damaged by recent missile attacks that have left millions without power.
Financial Regulation Roundup Senate Confirms Martin Gruenberg to New Term Atop FDIC
The Senate confirmed Martin Gruenberg for a second term as the head of the Federal Deposit Insurance Corp., capping a turbulent period for the agency and cementing Democratic leadership on the bank regulator's board.
Binance.US to Buy Assets of Bankrupt Crypto Lender Voyager
The U.S. arm of Binance, the largest cryptocurrency exchange by trading volume, has agreed to buy the assets of bankrupt crypto lender Voyager Digital, which resumed its search for a buyer after crypto exchange FTX collapsed.
If Grayscale's Bitcoin ETF Dreams Fail, Firm May Try a Tender Offer
Grayscale Investments said it would explore new options to return a portion of the Grayscale Bitcoin Trust's capital to shareholders if it fails to transform the world's largest bitcoin fund into an exchange-traded fund .
Tech Companies Make Final Push to Head Off Tougher Regulation
Supporters of tougher technology regulation are making a final push to eke out a few wins before Congress adjourns, but tech companies have built a perfect record so far in blocking major legislation
Forward Guidance Tuesday (all times ET)
8:30 a.m.: U.S. housing starts for November; Canada retail sales for October
10 a.m.: FCCI Flash Consumer Confidence Indicator for December
Wednesday
8:30: Canada consumer-price index for November
10 a.m.: The Conference Board Consumer Confidence Index for December; U.S. existing home sales for November
Commentary U.S. and China Suddenly Play a Bit Nicer-Except in Chips
The news for China's semiconductor sector remains mostly ghastly and chips will remain an arena of fierce competition between Beijing and the U.S., with the latter still holding most of the important cards, Jacky Wong writes.
Basis Points U.S. home builder confidence declined in December, closing a year in which sentiment fell every month amid high mortgage rates and elevated construction costs, according to National Association of Home Builders data. Its gauge of the single-family housing market decreased from 33 in November to 31, further indicating more builders view conditions as poor rather than good and the lowest confidence reading since mid-2012, with the exception of the onset of the Covid-19 pandemic in spring 2020. (Dow Jones Newswires) Producer prices in Canada eased in November, led by energy products, and companies paid slightly less for raw materials. Statistics Canada's industrial product price index fell 0.4% from October, when the index advanced 2.4%. On a 12-month basis, November's producer-price index rose 9.7% Excluding energy products, producer prices were unchanged on-month in November, the data agency said. (DJN) The U.K. economy looks set to shrink next year as rising food prices and wage costs fuel inflation, HSBC said, noting the economy is likely to contract in the first two quarters of the year, resulting in an overall 0.5% fall in GDP in 2023, followed by a 1.3% rise in 2024. (DJN) Sentiment among German businesses rose in December to its highest level since August, providing some optimism that the current economic downturn could be less severe than feared. The Ifo business-climate index increased to 88.6 in December from a revised 86.4 in November, marking its third improvement in as many months, according to data from the Ifo Institute. (DJN) Uganda's economic growth will likely average 4.7% over the next three years, slightly lower than the 5.3% in the decade before the Covid-19 pandemic, as the country faces higher inflation, an Ebola outbreak and the prospect of a global slowdown, S&P Global says. (DJN) Feedback Loop
This newsletter is compiled by Perry Cleveland-Peck in Barcelona and James Christie in San Francisco.
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
12-20-22 0715ET
