The Bank of Japan’s government debt holdings have fallen for the first time in 13 years as the central bank quietly adjusts its massive bond-buying program in the face of looming financial risk.
The BOJ’s balance of Japanese government bonds totaled 521 trillion yen ($4.49 trillion) at the end of 2021, according to data released Wednesday, down 14 trillion yen from a year earlier.
Down from an eye-watering 535 tln to a marginally less euye-watering 521 tln.
There is plenty more at the piece, link here (may be gated)
Nikkei says the motivation for the reduce tion was ‘tackling risk’
The major US indices closed the new near session lows. The declines were across the board today as the overall market reacted to the idea that the Fed would look to run down its balance sheet in addition to increasing the taper, and starting to tighten.
The Dow industrial average closed at record levels on the first two trading days of the year. Today the index reached a new all-time high, but started to tumble after the FOMC meeting minutes. The new all-time high for the Dow industrial average is at 36952.65
The NASDAQ index has been on a one-way street to the downside over the last two trading days and is down nearly 7% from its all-time high. Having said that, the price is still above its December 20 low at at 14860.04. At the December 20 low the NASDAQ index was down -8.34%
The S&P index has started to give up some of its gains today after reaching a new all-time high just yesterday at 4818.62
Dow industrial average, -392.54 points or -1.07% at 36407.12
S&P index -92.94 points or -1.94% at 4700.59
NASDAQ index -522.53 points or -3.34% 15100.18
The move higher in interest rates, is certainly a major catalyst. The 10 year yield reached a high of 1.712%. That took the yield to the highest level since early April 2021. The largest gains were in the short end, however, where the two year yield was up nearly 6 basis points
US yields
In the forex, the EUR is ending the day as the strongest of the major currencies. The CAD is the weakest. The USD is mixed with declines versus the EUR and GBP and gains vs the CHF, CAD, AUD and NZD. The greenback was near unchanged verse the JPY.
The major European indices are closing higher for the third consecutive day. The Spain’s Ibex may be the exception as it waffles up and down above and below unchanged.
The provisional closes are showing:
German DAX, +0.7%
France’s CAC, +0.9%
UK’s FTSE 100 +0.2%
Spain’s Ibex unchanged
Italy’s FTSE MIB, +0.7%
Looking around other markets as London/European traders look to exit:
Spot gold is up $10.30 or 0.56% $1824.30
Spot silver is up six cents or 0.3% $23.10
WTI crude oil is up $1.21 at $78.20
The price of bitcoin is trading fairly steady at $46,400
The US stock market continues to see rotation out of the tech sector and into the cyclical sector.
Dow industrial average is up 79.2 points or 0.21% at 36877.23. The Dow has closed at a record level for each of the first two sessions of the calendar year.
S&P index is down 10 points or -0.22% at 4783.13
NASDAQ index is down -148 points or -0.95% 15473.42. That is near the low for the day at 15471.53
Russell 2000 is down 8.5 points or -0.37% at 2260.28
In the US debt market, the yield curve is flatter today with the two year up while the 30 year is down marginally.
In my experience, when a new position goes against you, it usually keeps going down. Good trades start making you money right away.
You can always get back in if you exit too soon.
The takeaway is that you can never let a single losing trade wipe out any of your gains — they’re hard enough to get in the first place.
If you don’t take the small loss today, you risk total loss of your capital or career tomorrow.
Gains look like gains only to the extent that you keep your losses small.
“Win it right back” is a death spiral. Keep your losses small, and you’ll never be in one.
If you do not take action, you are choosing a more likely chance of feeling despondent when you lose a larger portion of your capital, compared to taking a guaranteed small loss. All the while you had the power to get out of a losing position, but you chose not to. You chose not to do the right thing because you were afraid to feel certain feelings.
Euro area economic growth stumbled in December as the pandemic flares up, largely weighed down by Germany. The region’s biggest economy saw activity slump to its lowest in 18 months amid a surge of COVID-19 infections and tighter restrictions.
The downturn in the services sector is what stands out last month, with price pressures continuing to stay more elevated heading into the new year. On the latter, that reaffirms the notion that inflation is not likely to abate any time soon. Markit notes that:
“The accelerated expansion in output we saw in November unfortunately turned out to be brief. Amid a resurgence of COVID-19 infections across the euro area, growth slowed to the weakest since March in December. In Germany, where measures to combat COVID-19 have been more stringent than other monitored euro area countries, levels of economic activity broadly stagnated in December. Nonetheless, slower growth was seen across the board.
“The spread of the Omicron variant had a particularly profound impact on the services sector, reflecting renewed hesitancy among customers due to the novel strain of the virus. Looser travel restrictions in recent months had facilitated greater levels of tourism, which in turn provided additional support to the eurozone service sector. However, this was withdrawn in December as overseas demand declined for the first time since May.
“There was also little to cheer with regards to inflation. Although there was a marginal easing of price pressures, we’re still in excessively hot territory – increases in both input and output costs were the second-quickest on record.
“As euro area nations deal with the latest developments in the pandemic, it’s clear that risks to the economy are now greater as tighter restrictions to curb the spread of COVID-19 are more likely than they have been recently.”
