Oct 31. BoJ gives dollar bulls a surprise treat

–The BoJ gave dollar bulls a treat with massive expansion of QE, sending dollar/yen above 111 (from 108 yesterday) and lifting the Nikkei nearly 5%.  Japan’s gov’t pension fund has also decided to increase its allocation into stocks.  Gold is down another $25, oil down $0.60 and S&Ps have soared to a new high above 2010.  Interestingly tens are only down 4/32’s to the 126.5 strike, and green eurodollars only -1.5.  Though Kuroda’s move overwhelms all else, German Retail Sales were reported -3.2% for Sept, as the EU continues to face its own deflationary pressures.

–While positive wealth effects from the stock rally should be negative for US fixed income, the BoJ’s actions probably pressure other Asian exporters to cut prices and/or depreciate currencies.  It likely adds to deflationary pressure in the EU and US.  EUR edged to a slight new low from yesterday, touching 125.5, before bouncing back slightly.

–Today’s US news includes Personal Income and Spending expected +0.3 and +0.1.  Chicago PMI expected 60.5, unchanged from last time.

Posted on October 31, 2014 at 5:14 am by alexmanzara · Permalink
In: Eurodollar Options

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