The impact of the Bank of Japan and Yomiuri's negative interest rate cancellation option leak article that imitates the Fed method

The Yomiuri Shimbun's leaked article on negative interest rate cancellation options shocked not only the Japanese market, but also the US bond market. This is because Japanese institutional investors are seeing the possibility of selling foreign bonds all at once and buying yen bonds. Already at the press conference of the Bank of Japan monetary policy meeting on July 28, Governor Ueda acknowledged that monetary policy normalization is a weapon to revise the depreciation of the yen. The side effects of YCC are significant, and it is clear that negative interest rates only have a symbolic meaning (only mail savings and trust banks are actually applied). In that sense, fine adjustments to YCC and cancellation of negative interest rates were anticipated.

The reason this article had an impact is that Vice President Uchida's YCC fine adjustment leak (Nikkei Shimbun) on 7/6 led to a change in reality on 7/28. Although the mass media and the person who leaked it are different, the composition is the same. WSJ (reporter Timiraos) took the lead in conveying monetary policy intentions to the market through mass media, and it seems that the Bank of Japan also imitated it. Market acceptance is skeptical, and there are people who view it at the time of next year's outlook report (2024/1), but I think there is a big possibility that negative interest rates will be lifted at the Bank of Japan monetary policy meeting on 9/22 this time. This is because if you go through mass media, gas will be exhausted, and market turmoil can be avoided.

Governor Kuroda and President Ueda have different ways of communicating. Meanwhile, Chief Cabinet Secretary Matsuno stated that he would closely monitor the impact on mortgages. 75% of mortgages have variable interest rates, and even if negative interest rates are lifted, they will probably be acceptable if interest rates are not raised. However, I think the shelf life of the appreciation of the yen due to the cancellation of negative interest rates this time is short. Not only is there only a symbolic meaning, but if YCC is completely canceled, a decline in yen bonds is expected, so the movement of institutional investors selling foreign bonds and buying yen bonds is limited. Japanese institutional investors are considering not only income but also capital investment in bonds.