World stocks rose on Wednesday, led by a surge in bank shares, after the Bank of Japan overhauled its monetary policy to target interest rates, though the yen recovered initial losses against the dollar on scepticism those moves would stoke inflation.
Stock market bulls have got more than what they were realistically hoping for from the Bank of Japan and now better hope that the U.S. Federal Reserve doesn’t ruin the party for them. Global stocks surged higher and the yen weakened across the board, although the latter has since found strong support against the dollar as traders took profit on their positions ahead of the Fed meeting later on today.
The Japanese Finance Ministry's ceiling for ministries' budget requests for next fiscal year will cap costs on government debt at a four-year-low of 24.62 trillion yen ($245.2 billion), according to a draft seen on Thursday by Reuters.
The Bank of Japan says there is no possibility of helicopter money, and by a strict definition they are correct. But as the government plans to issue more 40-year bonds, it is looking more and more like some monetization of debt is underway. The BOJ says as long as it buys Japanese government bonds (JGB) from the market, it is not directly underwriting bonds to fund government spending.
The U.S. Federal Reserve and the Bank of Japan showed the two sides of central bank action this week. The Fed's Federal Open Market Committee ended with no change to the U.S. benchmark interest rate. The lone dissenter was once again Federal Reserve Bank of Kansas City President Esther George.
Crude oil prices continue to fade as the oil trade is losing confidence on the global economic outlook. Because of the slowdown, fears surrounding Brexit and an uncertain political environment, optimism that rising demand would meet the trend of decline production has been pushed back by a couple of months.