Fall Down Seven Times, Stand Up Eight

Breaking: Johnson signals shift on Ukraine to GOP senators [The Hill]

This famous Japanese quote is an idiomatic expression that means to keep at something until you succeed. No matter how many times you fail, you must get back on your feet again.

Flying under the financial market's radar this week is a 2 day Bank of Japan meeting to set monetary policy. It's on Monday and Tuesday.?

After 5+ years will the Bank of Japan raise rates from NIRP (-0.1%) to zero or positive.

New Governor Ueda has already told he's looking to make the change if Japan can sustainably achieve as much as a 2% core inflation rate, which it pretty much has now. Is this what the Japanese stock market rallies should have told us? And who cares?

Well, US Treasury Secretary Janet Yellen cares.

As the world's largest foreign holder of US debt (US$1.1 trillion), Japanese investors have been on a famous carry trade, buying treasuries with a decent yield and watching USD / Yen go through the roof.

Will the flow reverse and all that capital get returned to Japanese Govt Bonds ? That rather depends on the BoJ and their statement. With 10 year JGBs currently yielding 0.75% that sounds unlikely.

BoJ owns at least 50% of the debt of Japan and Japan has the highest Debt-GDP ratio of any advanced economy in the world, at 250%. To return to it's former glory Japan needs domestic buyers of it's debt, which the BoJ can then offload.?

Maybe this is their opportunity.

Which Countries Hold the Most U.S. Debt? [Visual Capitalist]?

How high will borrowing costs go once Bank of Japan ditches negative rates?

BOJ to end negative interest rates at next week's meeting, sources say [Japan times]

Japan's economy recovering but showing signs of weakness, says BOJ chief Ueda [Reuters]

Japanese stocks tumble 3%, yen firms as end to ultra-dovish BOJ appears nigh [investing.com]

BOJ Mulls Ending Yield Control to Focus on JGB Buying Size: Jiji [Bloomberg]

BOJ Refrains From ETF Buying, Stokes Policy Move Speculation [Bloomberg]

Markets scramble ahead of BoJ’s ‘momentous’ rate pivot [AFR]

US Treasuries Under Pressure

Ugly, Tailing US 10Y Auction Sees Lowest Foreign Demand Of 2024 [Zerohedge]

This week's US CPI and PPI data showed inflation ticking up, just as FED is trying to set the stage for interest rate cuts.

Metals Breaking Out

The rush to sound money continues.?

In The Background

United States

Corporate defaults at highest rate since global financial crisis, says S&P [FT]

Some things to watch out for

• Retaliation by China following the US Tik Tok decision
• Use of the FED's Discount Window by distressed banks
• Use of continuous swap lines from FED
• Cost of insurance cost spiking everywhere
• Fiscal spending election promises (US)

China

Chinese developer Vanke in spotlight after Moody’s downgrade [FT]

Europe

Germany’s Backbone of Family-Owned Firms Is Up for Sale [Bloomberg]

Italy’s bond spread sinks to 2-year low as economy outshines German [FT]

What's Next

BoJ and RBA Tuesday and FED Wednesday, BoE Thursday means markets could be volatile.?

This Week's Important Economic Indicators [London time]