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Bank of Japan Doubles Its Stimulus Program

Minyanville Staff

Today was all about the central banks although US equities were mostly flat. Overnight, the Bank of Japan introduced new monetary stimulus measures, which are double the size of the existing program. The BoJ will begin purchasing 7.5 trillion yen in government bonds, index funds, and REITs in an effort to end deflation and increase economic activity. The move caused the USDJPY pair to post the biggest rise of the last two years, up $3.10 to $96.14. The Japanese Nikkei stock index also posted a 2.20% rise.

The other two central banks making monetary decisions today were the Bank of England and the European Central Bank. Both banks kept their policies on hold, as expected. During the ECB's monthly press conference, President Mario Draghi took on a much more dovish tone and caused the EURUSD to rally back significantly. The EURUSD reached an intraday low of 1.257 before rallying back to 1.2932. Any change in the BoE's monthly asset purchases or interest rates is not expected until next month at the earliest.

Weekly jobless claims rose to 385,000 from last week's 357,000. The sharp rise was not attributed to any specific event, but the Labor Department did note that seasonal adjustments are always difficult to calculate around the Easter season. Planned job cuts as reported by Challenger rose 30% year-over-year, led by strong firings from retailers Best Buy (BBY), JC Penney (JCP), Sears (SHLD), Kmart, and Blockbuster.

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Treasuries rallied strongly throughout the day, which is unusual since the weak yen would typically lead to weakness in that part of the market. Financials were a strong sector throughout the day, but Goldman Sachs (GS) was notably weaker. Crude oil was notably weaker, closing the day at $93.18, down $1.27.

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Tomorrow's Financial Outlook

Tomorrow morning, we will see the long-awaited nonfarm payrolls report. Given the recent downturns from the Challenger job cuts, ADP private payrolls, ISM services employment subindex, and weekly jobless claims, the market is primed for a pretty poor report. Economists estimate that the US will create 190,000 nonfarm payrolls and the unemployment rate will remain unchanged at 7.7%. However, given the recent weak action in the markets and recent data, it's unlikely that the market is expecting much above 150,000. Late in the day we will see the Federal Reserve's February's consumer credit report. Economists expect to see $15 billion in seasonally adjusted credit growth, down slightly from $16.151 billion the month prior.

In Europe, the eurozone will release February retail sales and Germany will release factory orders. Eurozone retail sales are expected to decline 0.4% month-over-month, down from a 1.2% gain last month. German factory orders are expected to rise 1.1% month-over-month, up from a 2.5% loss last month.

There will be no major earnings reports in the US tomorrow.

Twitter: @Minyanville

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