Currency Analyst since 2010

Japanese stocks plunged

Japanese Nikkei 225 stock index has plunged by 6.35% today, its third fall of more than 5% in the past month. The gauge declined by 20% from its May 22 high, passing the threshold some investors use to define a bear market.

Topix index of shares dropped by 3.8%. The index 17% since May 22, when it closed at its highest level since August 2008.

USD/JPY slid to more than 2-month low below 94.00. Yen now unwound all its losses since the Bank of Japan announced unprecedented monetary stimulus on April 4.

There’s a great volatility at Japanese equities, the highest since the earthquake and nuclear disaster of 2011. Japanese bond yields survived a sharp increase in the recent months (from an all-time low of 0.315% to levels around 1%) which raises difficulties for the government and pension funds. There is the necessity for additional monetary stimulus from the Bank of Japan, especially taking into account the fact that the central bank’s inflation target is still very far. Today Japanese bond yields eased down to 0.86% as the losses in stocks fueled demand for the relative safety of debt.  

Snapshot from Bloomberg

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