Less than 4 weeks ago, on January 6, we reported of the "Macy's Massacre: Thousands Fired; Guidance Slashed (Again); Weather Blamed", where in addition to the massive layoffs announced by the iconic retailer, we learned that as a result of the "historically warmer weather", the company's prior guidance was no longer valid. Here is what it said in early January:
Kuroda's decision to go full NIRP-tard is benefitting investors worldwide... in bonds. JGB yields hit record lows, 5Y Bunds are trading below the -30bps ECB deposit rate, and US Treasury yields are collapsing across the curve with 10Y below August's Black Monday lows back to 9 months lows...
US Treasury yields are plunging... 10Y broke below Black Monday lows...
And 5Y rejected the top end of its range once again...
JGB yields hit record lows...
With German and Japanese bond yields negative to 8Y and 9Y respectively...
There is just one phrase to explain the market's reaction to last night's BOJ announcement that it would join the ECB, Sweden, Denmark, and Switzerland into negative territory: stunned shock.
As the WSJ writes, "many investors had anticipated an expansion of the bank’s asset-purchasing program this year, but few expected Japan to join the European Central Bank and central banks of Sweden, Denmark and Switzerland in negative territory on Friday."
It is safe to say that nobody expected the BOJ stunner announced last night, when Kuroda announced that Japan would become the latest country to unleash negative interest rates, for one simple reason: Kuroda himself said Japan would not adopt negative rates just one week ago! However, a few BIS conference calls since then clearly changed the Japanese central banker's mind and as we wrote, and as those who are just waking up are shocked to learn, negative rates are now a reality in Japan.