There's a subtle shift happening at central banks around the world. With the exception of Japan, bankers are sending smoke signals about less accommodative monetary policy on the horizon. Consider developments this week:
The U.S., U.K. and E.U. are clearly telling us they are in watch-and-see mode, eyeing data to determine whether gathering momentum in the global economy justifies a shift towards less stimulative measures. The one exception is Japan... the Lone, or dare we say "Loan" Ranger. Japan's problems are clear:
Prime Minister Shinzo Abe and BOJ Governor Haruhiko Kuroda have made clear they will continue buying 60-70 percent of new JGB issuance until inflation reaches 2 percent (it's 0.3 percent now). The goal is clear:
We like clear messages. They define clear action:
Both Mizuho Securities and Citigroup are adamant in their morning notes for short yen positioning ahead of this weekend's G-20 meeting in Moscow. As Wells Fargo's Nick Bennenbroek adds, "Japan's deputy economy minister said the G-20 countries understood a weak currency was not a target of Japan's policies." In other words, Japan can keep doing whatever it needs to do to revive a moribund economy and the G-20 will turn a blind eye to lower yen.