BoJ tweaks but nothing more/Eurozone inflation eases yields/Uncle Sam's $ needs/Central bank gold demand/More anecdotes

Well, the tweak that was leaked is what we got from the BoJ but certainly nothing more as NIRP lives on and just won't die. They continue to redefine the word 'patience' when it comes to dealing with inflation. In their statement it said "Given extremely high uncertainties over the economy and markets, it's appropriate to increase flexibility in the conduct of yield curve control." Governor Ueda in his press conference said "Uncertainty is extremely high within both overseas and domestic economies and financial markets. We decided that it's appropriate to increase flexibility so that long term yields can be smoothly shaped, according to different future scenarios." In other words, if the 10 yr JGB yield gets to 1%, which it is quickly approaching, maybe or maybe not will they buy JGB's and now will tolerate a yield above 1% without being more specific. 

Also, while they raised their inflation forecasts, there was no guidance on when NIRP will be eliminated which is all of 10 bps and the yen is selling off back above 150 and itself further clouds the situation as we know the government doesn't want further weakness in the yen because it further stokes inflation, particularly with the big need to import energy products. Bottom line, the BoJ still remains afraid of its own shadow and the enormous financing needs of the Japanese government is likely a key reason and who needs low financing costs. 

The 10 yr JGB yield was higher by 5.5 bps to .95% which is the highest since 2012. 

10 yr JGB Yield

Yen, 40 yr chart

European and US bonds though are rallying because Eurozone October CPI came in below expectations at the headline level, up 2.9%, 2 tenths less than forecasted and down from 4.3% in September because of an 11% drop in energy prices. The core rate though was as expected, up 4.2% y/o/y vs 4.5% last month as service inflation was higher by 4.6% y/o/y and non energy industrial goods prices grew by 3.5% y/o/y. Maybe because the core rate was as expected, the 5 yr 5 yr euro inflation swap is unchanged at 2.50%.