ProShares Ultra Yen

YCL

시가총액 US$2986만

The rare, coordinated intervention by the U.S. and Japan last month to strengthen the yen caught markets by surprise, but it's important to separate currency mechanics from the investment case on the country. Interventions of this magnitude draw attention because the stakes extend beyond exchange rates.

Solid growth and ongoing shareholder-friendly reforms are driving Japanese equity gains, keeping us overweight. We see the AI theme playing out globally.

Nikkei 225 broke below its 200-day moving average and a four-month range configuration. US President Trump's trade war 2.0 against major trading partners triggered a negative feedback loop in Japanese equities due to potential disruption in semiconductor supply chains.

The “real” policy rate is massively negative, with the new policy rate of 0.25% far below Core CPI of 2.6%. When QT reaches about ¥3 trillion per month in 2026, it would represent a reduction of its JGB holdings of about 0.5% per month.

Japan has been struggling for some time to generate enough velocity in inflation to escape the gravitational pull of deflation. The story for the rest of 2024 and into 2025 is now centered on whether inflation will be sustained at the BOJ's 2% target.

A weak yen is unlikely to end the positive momentum in Japanese equities. The drivers of the recent rally remain, so we stay overweight Japanese stocks.

The Bank of Japan is set to normalise monetary policy when certain conditions are met, namely inflation, positive real cash earnings, and a recovery in domestic demand growth. We expect the window for normalisation to open from July for about a year before inflation begins to fall below 2%.

Kazuo Ueda becomes Governor of the Bank of Japan, continuing the loose monetary policies implemented by his predecessor. The BOJ raises short rates from -0.1% to 0.1%, becoming the last central bank to exit a Negative Interest Rate Policy.

The Bank of Japan has now ended decades of unconventional and aggressive monetary easing. Strong wage negotiation results played a crucial role in today's move.

The Bank of Japan stood pat on monetary policy today as widely expected. But the market is now paying attention to a more positive tone on the wage and inflation outlook, as well as an upgrade to the FY2024 inflation outlook which lays the groundwork for policy normalisation.