The Intelligence Report – 22 January 2018

22 Jan 2018

  • BoJ ‘tapers’ asset purchases – but is it really a policy change? – the Bank of Japan recently announced that it was reducing its purchases of long-dated Japanese government bonds. We will argue that this tapering is more of a technical adjustment rather than a significant change in monetary policy.
  • Establishing a long European equity position – we will explain the reasoning behind our Multi-Asset, Quantitative and Solution (MAQS) team’s recent decision to overweight European equities.

On January 9th, the Bank of Japan (BoJ) announced that it was reducing its purchases of long-dated Japanese government bonds (JGB). In the first of this week’s articles, Naruki Nakamura argues that this tapering is more of a technical adjustment in the face of shrinking JGB supply rather than a significant change in monetary policy. Naruki goes on to examine the likelihood of Kuroda remaining in place as BoJ governor, and analyses possible policy shifts and their likely drivers, whether Kuroda remains in place or not.

In the second of this week’s articles, Colin Harte explains the reasoning behind Multi-Asset, Quantiative and Solution’s (MAQS) recent decision to overweight European equities, which the team sees as the most efficient way of raising exposure to equity beta in portfolios.

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