The Japanese market is attracting a lot of attention today due to a major policy shift by the Bank of Japan (BoJ). Speculators have placed bets on larger changes by the central bank as a result of the BoJ's decision to change its policy band for bond yields. Investors now believe that the foundation for change is being laid after the BoJ decided to expand the previous 25 basis point band to 50 basis points either side of its 0% target, despite the fact that the central bank has declared that it is not a form of interest rate hike. The practice of yield curve control (YCC) may be targeted next, which may cause a massive selloff of Japanese bonds if the BoJ decides to remove the yield cap altogether.

EQUITY

On Tuesday, Wall Street ended the day with a slight increase after four consecutive days of declines, but investors remained concerned about poor holiday shopping, rising bond yields, and the current quarter's earnings season. The Bank of Japan's (BOJ) unexpected adjustment to its monetary policy has resulted in an increase in US Treasury yields, adding pressure to the market.

GOLD

Gold prices reached a one-week high on Wednesday due to the US dollar's decline against other currencies and uncertainty about the economic outlook, including the possibility of rising interest rates and a recession. Demand for the metal remained high, returning to pre-pandemic levels.

OIL

Prices of black gold are consolidating as the US reported lower crude oil stocks and concerns about rising COVID-19 cases in China offset one another, as China is the top oil importer. Saudi Arabia stated that OPEC+ will start considering politics in their future decisions.

CURRENCY

The Japanese yen retreated slightly from a four-month high as markets digested a surprise policy shift by the Bank of Japan. The move weighed on the dollar index, pulling it down 0.66% on Tuesday, and on most other Asian currencies.