Taps Coogan – January 11th, 2023

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Mr. Jim Grant, creator and editor of the esteemed Grant’s Interest Rate Observer, recently spoke with Fox Business about what he sees as the biggest event facing markets: the future of the Bank of Japan’s (BoJ) yield curve control program.

 

Some excerpts from Jim Grant: 

“There is an interesting thing happening in Japan and very few people have noticed. The Bank of Japan has suppressed its interest rates like no other central bank has done for longer than most of them have done it… The Bank of Japan had fixed in yield on the 10-year government securities at 0.10%, and then 0.25%, and now it is at 0.50%. Now the news is that the market is straining at the leash. The market is anticipating inflation will become a problem in Japan as opposed to the hope of the central bank. Central banks seem to want it and actually they seem to be getting. So, the great issue for the bond market is not what happens at tomorrow CPI (today), though that’s important. It’s not what happens at the next Fed meeting, though that’s important. It’s whether the Bank of Japan is going to give up on this project of yield suppression and if they do, there is, I think, going to be a lot of volatility in the world that people have not prepared for.”

 There is more to the interview, so enjoy it above.