Article / 21 September 2016 at 8:00 GMT

From the Floor: BoJ targets yield curve, financials jump

Your Next Trade

  • Bank of Japan maintains negative rates, targets yield curve
  • Policy statement boosts financial sector shares by over 5%
  • 'Our positions should benefit from a Fed hike' — Garnry
  • Gold, miners supported by BoJ but FOMC could change everything
  • Oil markets gyrate wildly after shock API inventories drop

From the Floor

By Michael McKenna

One of this week's two major central bank outings is now behind us with the Bank of Japan releasing its latest monetary policy statement in the late Tokyo session. The Federal Open Market Committee's statement, of course, will be released at 2 p.m. today, Eastern Standard Time, promising volatility and volume even if the Fed fails to surprise with the fabled rate rate hike.

BoJ decision boosts financials, sends yen tumbling

In Tokyo, the BoJ maintained its minus 10 basis point rate stance and targeted the yield curve. Speaking live on today's Morning Call, Saxo Bank APAC macro strategist Kay Van-Petersen said that the central bank "is looking to buy the near-end of the curve while letting the back-end go up." This, of course, benefits banks and insurers – a hugely significant sector of the Japanese economy – while the consequent drop in the yen's value has boosted equities as a whole.

"We were long Nomura via CFD ahead of the announcement," says Saxo equities head Peter Garnry, adding that he is looking to take profits at 500; as it stands, the Nomura Holdings CFD is trading in the mid-480s in Tokyo.

In Garnry's view, the upward surge seen in Japanese financials – the sector is currently up by over 5% – represents a generally positive market consensus on the BoJ's decision, but he notes that he does not expect to hold the Nomura trade past 500 as the momentum is simply not that strong.


Create your own charts with SaxoTraderGO click here to learn more

Source: Saxo Bank 

"Markets were mixed going into the BoJ statement," says Van-Petersen, "and they were mixed going out as well. My key concern here is a ripple effect towards higher yields in the G3 space."

Beyond Japanese banks, Garnry notes that he is currently looking at a long position in Coca-Cola as "the selloff has largely exhausted itself." 

Saxo's head of equity strategy says that Coca-Cola shares could benefit from improved conditions in emerging markets, stating that he will target $44/share while placing a stop-loss at $41.50.

'Stale' gold markets find support

Garnry is also looking towards the commodities space this morning, where Saxo head of commodities strategy Ole Hansen notes that the BoJ move has spurred gold demand. In Garnry's view, the policy shift will likely benefit miners such as Glencore, which he plans to buy at the opening bell with a stop at 186 and a target of 250 (GBp).

Although gold has benefitted from the BoJ decision, however, Hansen remains of the view that the XAU market is "stale" with the BoJ support not likely to drive gold prices out of their current range.

"It will likely not even drive prices to the top of the current range," he says, adding that the precious metals market is in need of a correction.

"A move down to $1,250/oz would have gotten investors moving, but given the BoJ decision, that might not happen," says Hansen.

Beyond those assets most closely tied to the news out of Tokyo, Hansen also reports that crude prices continue to gyrate in the wake of yesterday's shock API numbers that saw a 7.5 million barrel drop in oil inventories one day ahead of today's EIA print where forecasters still expect a 3m barrel gain.

In terms of crude fundamentals, of course, the main event remains next week's Opec summit in Algiers, but even that pales into relative insignificance ahead of today's statement from the FOMC.

"That could change everything," says Hansen.

Washington, D.C.
Back to you, Janet... Photo: iStock 

Michael McKenna is an editor at

Follow Saxo Squawk live throughout the day. Sign up here to keep abreast of all developments affecting your portfolios.

Editor’s note: From the Floor takes advantage of's unique real-time access to Saxo Bank’s various trading desks around the globe to put our community in touch with the developments that matter to their portfolios.

Arvydas Dabulskis Arvydas Dabulskis
Where I can find video?
Arvydas Dabulskis Arvydas Dabulskis
I found it. Editor changed location of link in article.
SierraPt. SierraPt.
Have you set the target for Nikkei? When you introduced the position you told that 'we shall see how it goes'


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail