Inflation, crude oil prices, unemployment rate, the situation in Ukraine ...
The factors that influence the monetary policy of each country are intricately intertwined, making it extremely difficult to predict the future of stock prices, exchange rates, interest rates, etc.
Meanwhile, there is an index that market participants are paying attention to as "an index like a" mirror "that predicts the future of the BOJ's monetary policy."
Its name is "OIS (Overnight Index Swap)".
What kind of future is reflected in the mirror?
(Keiichiro Furuichi, Reporter, Ministry of Economic Affairs)
"OIS" is currently attracting attention from market participants.
It is a transaction that "swaps" "fixed interest rate" and "unsecured overnight call interest rate for a certain period", and is one of the indicators for professionals.
"Unsecured overnight call interest rate" is a typical short-term interest rate index of the market where many financial institutions lend and borrow money, which is called the call market, and it fluctuates daily.
On the other hand, the "fixed interest rate" is also called the OIS interest rate, which is an interest rate that is decided in advance for each repayment period when financial institutions lend and borrow money.
This is the "mirror".
The reason is that when deciding this interest rate, each financial institution sets out the level of interest rate by predicting what the BOJ's policy interest rate is likely to be based on various analyses.
For example, in the case of a fixed interest rate with a term of one year, assuming that the Bank of Japan continues the current large-scale monetary easing one year ahead, the interest rate will be set low.
On the other hand, assuming that the Bank of Japan is moving toward tightening monetary policy one year from now, the interest rate will be set high.
Information on the forecast of "fixed interest rate" = policy interest rate set in this way is collected by a short-term fund company that mediates OIS transactions, so that the market as a whole can understand how the BOJ's policy interest rate is going. That's why.
It is a graph showing the transition of OIS interest rate.
The "green" line is the graph as of August 4, 2021, and all the figures are in the minus range, and the numbers are declining to the right.
In other words, as a result of reflecting the Bank of Japan's monetary policy, it shows that "the market expects interest rates to remain negative and decline from 2021 to 2011."
The "yellow" line is the graph as of November 24, 2021.
All the numbers are in the minus zone, but the shape is almost flat.
This shows that "the market expects interest rates to be negative, but will remain almost flat."
In contrast, the "blue" line (as of February 10, 2022) and the "red" line (as of February 24, 2022) have significantly different graph shapes.
Until the middle of 2022, it was flat in the minus zone, but in September it was near zero, and after that, it has been rising in the plus zone.
This means that "the market expects interest rates to be positive and continue to rise after the fall."
Behind these changes, following the Fed and the Bank of England, the ECB, the EU's central bank, announced at its February board meeting that it would clarify concerns about inflation and push forward with curtailing monetary easing. there is.
In the monetary tightening phase so far, the United States, the EU, and Japan have been tightening in that order.
There is a view that the ECB is close to the BOJ's stance because the EU has a smaller inflation rate than the US and UK.
At this stage, the ECB's stance toward tightening has led to a pre-reading that the Bank of Japan will eventually be in sync.
Regarding these changes in OIS interest rates, Totan Research's Kato Ide team economist said:
"Given that the BOJ's term of office is approaching April next year, the market has the" speculation "that the BOJ will change its policy toward monetary tightening under the next governor. It shows that there are many people involved. However, the market may be a little too rushed because the BOJ has a high hurdle to actually tighten monetary policy. OIS is just one reference index. Russia
's
invasion of Ukraine has triggered a variety of reactions in the financial markets, including volatility in stock prices, falling long-term interest rates, and rising oil and gold prices.
Whether the main scenario of the global financial markets, "to tighten monetary policy to eradicate inflation," will not collapse.
And what kind of message will the Bank of Japan give about future monetary policy in the face of speculation?
The situation that keeps an eye on continues.
Next week's market will continue for a week depending on the situation in Ukraine.
In addition, it is likely to attract attention from the fact that important people's remarks are being made one after another in the United States.
On the 2nd, President Biden will present his annual policy in a State of the Union address.
Also, on the 3rd and 4th, Fed Chair Powell will testify at a House hearing.
Before the FOMC = Federal Open Market Committee in mid-March, it will be interesting to see how much we mention the expected rate hike policy.