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28 May 2013
Flash: The Abe government wants to have its cake and eat it - BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that the Abe government appears to want to have its cake and eat it.
The team begin by commenting that the administration wants to take credit for the economic recovery (and the fastest growing economy in the G7), demonstrate its commitment to ending deflation, and keep bond yields stable and low. With earnings bolstered by the translation of foreign sales and income from foreign investment back into the weaker yen, corporations appear to be benefiting from Abenomics. However, they comment, “Yet they are not facilitating its agenda by raising wages and investment. BOJ officials will again meet with Japanese bond dealers in yet another attempt to prevent its operations, in which it is buying 70% of the new issuance, from destabilizing the market. After the last meeting, the BOJ made more frequent and smaller purchases.”
The team begin by commenting that the administration wants to take credit for the economic recovery (and the fastest growing economy in the G7), demonstrate its commitment to ending deflation, and keep bond yields stable and low. With earnings bolstered by the translation of foreign sales and income from foreign investment back into the weaker yen, corporations appear to be benefiting from Abenomics. However, they comment, “Yet they are not facilitating its agenda by raising wages and investment. BOJ officials will again meet with Japanese bond dealers in yet another attempt to prevent its operations, in which it is buying 70% of the new issuance, from destabilizing the market. After the last meeting, the BOJ made more frequent and smaller purchases.”