Whoever has been nominated as the next governor of the Bank of Japan is less of a market authority than incumbent Haruhiko Kuroda. That could make some investors more aggressive to push yields higher after the governor’s change, said John Bale, chief global market strategist at Nikko Asset Management.
“None of them is probably as determined and dovish as Mr. Kuroda. They may have the same philosophy, but they carry as much weight as Mr. Kuroda in continuing an ultra-loose policy under tremendous pressure.” No,” Bale analyzed.
A recent Bloomberg survey of economists found Kuroda’s successors include Vice Governor Masayoshi Amamiya, former Vice Governor Hiroshi Nakaso, GPIF chairman Hirohide Yamaguchi, and Masatsugu Asakawa Asia. The names of the Governor of the Development Bank (ADB) and the Deputy Governor Masazumi Wakatabe were mentioned.
Succession Race
Most economists think Deputy Governor Amamiya will replace Kuroda
Source: Bloomberg survey
Kuroda, whose term expires in April, has repeatedly shown that he can keep an eye on the market. It was not afraid to go against other central banks in the world and was willing to surprise markets with bold policy changes.
As some traders urged the Bank of Japan to tighten its grip on raising yields, the central bank maintained its status quo on Thursday, sharply lowering yields on 10-year government bonds.
“There would have been some traders who learned a lesson,” Mr. Bale said.
If inflation is peaking, there’s a reason the incoming Fed governor won’t rush to roll back Kuroda’s policies, Bale said. The next Governor should hope the awe in the market doesn’t wear off any time soon, he said.
Original title:Bond Bullies May Find BOJ a Softer Target After Kuroda Leaves(excerpt)
