The last time the Bank of England raised rates was July 2007, when rates increased to 5.75%. Credit markets began to dislocate a month later (when LIBOR diverged from Fed Funds), equity markets peaked three months after the increase and things eventually got much worse.
With the Nikkei 225 having only suffered one down day (so far) in the whole month of October (a record), The BoJ decided it's better not to rock the boat and left monetary policy unchanged, as expected.
With new members at The BoJ, there was perhaps some uncertainty about Kuroda's decision today...
Boradly speaking Japanese economic data has been supportive but in recent days, disappointment has begun to set in once again...
Over the weekend, when looking at the record high ratio in median new home sale prices to household incomes in the US, we concluded that US homes have never been more unaffordable for the average American.
What about renting? Isn't it intuitive that if buying a house has never been more expensive, then at least renting should be cheap(er).
China manufacturing PMI tumbled from 5-year highs in October as officials increasingly prioritize a campaign to clamp down on polluting industries and rein in debt. Non-manufacturing took an even bigger hit, also disappointing expectations, as the lagged impact of China's deteriorating credit impulse begins to weigh...
Overnight we noted that the Chinese stock and bond markets 'turmoiled' as The National Congress came to an end and the forced repression of any weakness ended. Perhaps the most critical aspect of the moves was the push to new record levels of inversion in the Chinese sovereign bond curve.
The Chinese yield curve has now been inverted for 10 straight days - the longest period of inversion ever...