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Strict central bank policy will support JPY in the long term
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Loading...Sustainable liquidity .. Central banks, supporting strong liquidity conditions by expanding their balance sheet, have raised asset prices globally, helping to overcome the financial crisis. Financial markets lead the real economy. Now, with liquidity dropping, as central banks normalize their policies, the financial markets remain at the point of observation.
Higher capital expenditures. While the Fed is gradually hold, the impact of the normalization of the balance on markets and economies remains unexpected and can really tighten policy much more. Japanese overseas government debt helped keep global capital spending low. Now Japan has to introduce a steeper curve to stimulate credit growth, it can spend less than its savings on long-term foreign assets, which is positive for the JPY.
Increasing corporate bond spreads in the US may provide a US dollar sales signal as foreign investment has risen to 40% of corporate bonds.
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