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  • Market Insights  >  Weekly Outlook

26 December 2022,07:26

Weekly Outlook

Bank of Japan’s Surprise Bond Cap Raise

26 December 2022, 07:26

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Japan’s outgoing central bank governor Haruhiko Kuroda surprised markets with an increase of 25 basis points on the cap for the BoJ’s 10-year yields, effectively doubling the limit. The surprise has caught economists by surprise in light of the BoJ’s extreme dovishness even as the rest of the world embraces tightening. While the BoJ has said that the move will make its easing efforts more sustainable, yen traders worldwide have gotten skittish on the possibility of a hawkish pivot for the Bank of Japan, especially with a changing of the guard as Kuroda’s term ends in April next year. 

Tesla Shares Hit 52-Week Low

Shares for Tesla hit a new 52-week low last Tuesday, sinking 8% on the day. The stock has been dropping since April, when founder and CEO Elon Musk announced plans to buy social media giant Twitter. Investors have been exiting Tesla in no small part on the reasoning that Musk has been distracted by his Twitter purchase and subsequent ownership. Musk, meanwhile, has been blaming Tesla’s tumbling prices on macroeconomic factors, including rising interest rates. TSLA is down 59% from April, while Musk has sold billions of dollars worth of his own shares in the EV company to fund his purchase of Twitter.

Core Inflation in Japan Hits 4-Decade High

Japan’s core CPI increased by 3.7% year-on-year in November, the fastest it has increased since 1981, when it rose by 4%. The core CPI excludes volatile commodities like food and energy. Meanwhile, Japan’s economy shrank by 8 basis points year on year in Q3, weighed upon by recession risks and higher import costs. Asian shares are trading lower, while the yen found a boost with a surprise doubling of the price cap on the Bank of Japan’s 10-year bond yield. 

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