Between Federal Reserve Chairman Bernanke and Bank of Japan Governor Kuroda, they have unsettled investors and injected volatility into the capital markets that has not been seen for some time. The markets are trying to return to some semblance of stability ahead of the weekend, but the ripple effects are still evident.
The Nikkei initially retraced some of yesterday's steep losses, before selling off more than 3.5% through yesterday's lows and then recovering to finish 0.9% higher. The stock market and the yen have not been the subject of BOJ concern as much as the JGB market. Purchases of another JPY900 bln of JGBs (five year maturities and longer)coupled with yesterday's JPY2 trillion money market injecting helped stabilize the bond market, but the 8 bp day's range shows that volatility remains highs and the market's unsettled.