Recap 3-11-14:



  • BoJ kept policy unchanged as exp. It downgraded its assessment of exports, upgraded their view on capital expenditure and were optimistic on industrial production activity. In the press conference, Kuroda downplayed the downward revision of the 4QGDP (from 1.0% to 0.7%), released yesterday. Instead, he stressed the strong increase in capital goods supply (sum of domestic shipments and imports) and a continued improvement in corporate profits. The virtuous cycle of income (profits and labor income), spending (consumption and capex) and outputs is working solidly in domestic economy, in their view. Also, Kuroda emphasized the difference between current and 1997 when the tax was hiked previously. The recession in 1997-1998 was due to the Asian currency crisis (summer) and Japan’s own financial crisis (autumn). He stressed that there is limited risk to such currency crisis in Asia now and the Japan’s banking sector is one of the healthiest among major developed countries. In technical explanation, Kuroda mentioned that the CPI inflation will NOT accelerate as much as 2%pt (the impact of the tax hike from 5% to 8%, and 70% of CPI baskets are taxed) in April since the tax on utility bills will be raised from May (statistics bureau, compiler of CPI, confirmed this). When the BoJ will assess the underlying inflation excluding the tax hike impact, they deduct 1.7%-pt in April, then 2%-pt from May.
  • Barlcays:

  • AU NAB Business Confidence declined to 7 vs 8 prev
  • China: PBOC Governor Zhou Xiaochuan: "Deposit rate liberalization is on our agenda. Personally I think it’s very likely to be realised within one to two years."

Upcoming Data:

  • Wed: NZ House Sales, Turkey Current Acct, RBNZ, Japan Machine Orders, Rics House Price Balance, Australia Employment
  • Thu: China Data, US Retail Sales, Jobless Claims, Fischer confirmation hearing, BoJ Minutes
  • Fri: US Core PPI, U Michigan Confidence
  • Mon: US Empire Mfg, NAHB Survey,
  • Tue: German Zew, US CPI, Housing Starts, NZ Current Acct