Bank of Japan

After a furious three day "dash for trash", no volume, no breadth, commodity-driven rally, even Santa is now exhausted and overnight US equity index futures were little changed with European and Asian shares mixed. The dollar has declines as gold, silver gain, with WTI initially continuing its recent meteoric rise (up over 8% in the past three days, nearly hitting $38), only to reverse and give up all overnight gains moments ago.

When it comes to central bankers gone “full Krugman” (as it were) you’d be hard pressed to find someone more Keynesian crazy than BoJ governor Haruhiko Kuroda. 

Kuroda - who earlier this year likened himself to Peter Pan on the way to explaining that it’s possible to conduct unconventional monetary policy in perpetuity as long as market participants continue to “believe” - has not only managed to suck up the entirety of gross JGB issuance, he’s also succeeded in cornering the market for Japanese ETFs. 

In a weekend of little macro newsflow facilitated by the release of the latest Star Wars sequel, the biggest political and economic event was the Spanish general election which confirmed the end of the PP-PSOE political duopoly at national level, with Rajoy's leading block losing the absolute majority it had enjoyed since the last elections while rewarding the anti-austerity Podemos and the liberal Ciudadanos party, who between them took 109 seats in the 350-member parliament. As a result no clear governing majority emerged.

Arguably the biggest event overnight was yesterday's BOJ announcement which was widely expected to be non-event, yet ended up being anything but, when, as expected, the Bank of Japan did announce it would keep overall JPY80 trillion monthly QE unchanged, as forecast by 41 of 42 economists, however it also announced it would extend the average maturity of JGB holdings to 7-12 yrs, would establish a new program for ETF purchases targeting the stocks issued by companies "proactively making investment in physical and human capital", and lastly