The BoJ follows through/PMIs/Shipping rates/Important earnings comments

So the BoJ did follow through with an interest rate hike of 25 bps to .50%, the highest since 2008, which by meeting time was expected. The question then was what Governor Ueda would say about future hikes. "We don't have any preset idea. We'll make a decision at each policy meeting by looking at economic and price developments as well as risks." That said, "We'll raise rates and adjust policy if our outlook is realized." Not really discussed was the BoJ balance sheet where they continue to reduce the pace of their asset purchases.

Also of note, and pointing to more rate increases, Ueda said "The BoJ's estimate shows the neutral rate, in nominal terms, is in a range of 1%-2.5%. There's still some distance to that range, given the short-term rate is .5%."

Those last few comments is why yields across the JGB yield curve rose further overnight with the 2 yr yield up almost 2 bps to 72% and the 10 yr yield by a like amount to 1.23%. The 40 yr yield was unchanged. The yen initially rallied on the news but is back to unchanged. The Nikkei is flat and we still like and own Japanese stocks.

I still think what the BoJ does from here is a really big deal for global bond yields and liquidity.

Also out today and confirming why the BoJ raised rates to a still microscopic level of .50% was the December CPI print which came in up 2.4% ex food and energy as expected. The headline gain was 3.6%, two tenths above expectations because of the rise in both energy and food prices. While well above the BoJ overnight rate, Ueda said "I don't think we are seriously behind the curve in dealing with inflation." I scratch my head on that one but no central banker would admit to being so.

Japan's composite PMI for January rose to 51.5 from 50.5 and all because of a rise in services to 52.7 while manufacturing remained under pressure below 50. Australia's PMI was little changed just above 50 at 50.3 with also services above 50 and manufacturing below.

The Monetary Authority of Singapore, which uses its FX rate to tweak policy, slightly lowered its policy band for the first time in 5 years. Not a suprise.

India's PMI remained solid at 57.9 but did slip from 59.2 with both components well above 50.