Yen’s Slide Bolsters Appeal of Hawkish Bank of Japan Hedges

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomePMN BusinessYen's Slide Bolsters Appeal of Hawkish Bank of Japan HedgesWith the yen plunging to a four-decade low, a growing number of banks are advising traders to prepare for a hawkish Bank of Japan.Author of the article: You can save this article by registering for free here. Or sign-in if you have an account.vagmoj0mr4(oisbfge8xag7j_media_dl_1.png Bloomberg(Bloomberg) — With the yen plunging to a four-decade low, a growing number of banks are advising traders to prepare for a hawkish Bank of Japan.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountSociete Generale SA, Natixis SA and Barclays Plc argue that a historically weak Japanese currency could propel BOJ officials led by Governor Kazuo Ueda to accelerate interest-rate hikes in the months ahead to tame inflation.Concerns over the nation’s fiscal outlook, elevated oil prices and a widening US-Japan yield gap are putting pressure on the yen. A depreciating currency pushes import costs higher, directly stoking prices.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try again“Higher energy prices, a weak yen, and the faster pass-through of these costs to consumers are increasingly concerning BOJ officials,” said Societe Generale’s Stephen Spratt and Reo Sakida.The duo recommend selling five-year government bonds against the 30-year tenor, a position that will profit if the yield curve bear flattens.This week the yield on the 40-year Japanese government bond surged to 4.01%, approaching its record high just shy of 4.355% set in May. Meanwhile, the yen fell to 163.99 per dollar, its lowest level since November 1986.“With dollar-yen currently well above 163, there is a chance that the BOJ will adopt a significantly more hawkish tone at its July 31 meeting,” Dayeon Hong, Asis Pacific strategist at Natixis, said in a Friday note. She suggests a two-year yen interest-rate payer swap trade, a position that will profit if front-end rates rise.“Looking past this month’s meeting, the market could potentially price in a faster trajectory of rate hikes,” Hong added.Central bank policymakers are widely expected to hold rates steady at next week’s policy meeting after raising the benchmark rate to 1%, the highest in 31 years, last month.Swaps traders are pricing about 32 basis points of tightening from the BOJ by the end of the year, while half of the economists surveyed by Bloomberg still expect the central bank to wait until December to lift rates. That contrasts with economists at Barclays, who see the central bank next hiking in October and then again in April.Ueda will take “every effort to strike a hawkish tone, including in his answers on the timing of the next rate hike, in order to restrain yen weakness and buy time until the next rate hike,” Barclays’ Naohiko Baba and Takashi Onoda said Friday. This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.