Slight Shift In BoJ’s Inflation View
The Bank of Japan left its main policy settings unchanged, but the statement reflects a slight shift in its views on inflation that read as a touch more persistent. However, this subtle change is still too early to drive a hawkish policy shift.

The lack of a policy shift explains why USDJPY is broadly unmoved. It sees underlying inflation increasing, “mainly on the back of improvement in the output gap and a rise in medium- to long-term inflation expectations.”

The BoJ reiterated that it “will not hesitate to take additional easing measures if necessary.” the BoJ’s preference to see a consumption recovery before normalizing policy is intact. Consumer spending remains a downside risk for the central bank on that score.

Change in China Zero Covid Policy?

According to CCTV, a politburo meeting chaired by President Xi reiterated China’s zero-covid policy via increased testing coverage and a higher vaccination rate. That does not signal a more relaxed approach. However, authorities in Shenzhen are allowing businesses to reopen and production to restart as covid cases decline.

 

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That should alleviate concerns about weaker industrial production domestically and global inflation risks, given the city’s importance as a tech manufacturing base. Hence I suspect gold is shifting slightly on the supply chain inflation downgrade.

I bought oil on Shenzhen headline but taking profit now.

Running 
Have a great weekend, folks! This former ” fat boy” ( I dropped 50kg since I started running three years ago ) is off to Hau Hin to train for an upcoming marathon. If you are interested and looking for some motivation, I update my daily 10-15 km runs on my personal Twitter account ( below). You don’t need to follow me but check out #marathontraining. It’s super inspirational.

From Stephen Innes Managing Partner at SPI Asset Management