Yen slides to six-year lows on BoJ intervention

JPY slid to six-year lows overnight following the unexpected announcement by the Bank of Japan that it was expanding its easing programme to JPY80 trillion annually from its previousJPY60-70 trillion.

In addition to the announcement from the Boj, at 5pm Tokyo time (8am GMT), the Japanese Government Investment Fund will hold a press briefing at which it is expected to announce an increase of its holdings of foreign investments.

UP

Equity markets strengthened across the board yesterday. The S&P added 0.62 percent, while the Dow gained 1.3percent.

The Ftse gained 0.15 percent, erasing earlier losses, but was held back by mining stock weakness. Wealth management group St James’s Place gained 3.6 percent on stronger-than-expected results.Barclays gained 0.9 percent after reporting pre-tax profits of GBP3.72bn for the year-to-date, up from GBP2.85bn at the same point last year.

Before this morning’s market opening, RBS has reported pre-tax profits of GBP1.27bn for the third quarter. In addition,the bank announced that it has set aside a GBP780m war chest to fund litigation costs, including the repercussions of the FX rate scandal still currently under investigation.

DOWN

Gold remains under pressure, declining 1.03percent to USD1,186.30/oz following the US Federal Reserve’s announcement onWednesday that it was winding up its current quantitative easing programme.

In addition, silver fell to its lowest price since 2010, with spot prices declining 1.34 percent at USD16.20/oz.

DAY AHEAD

We have a very quiet day ahead in the UK,with no data releases or events of note.

In Europe at 10 GMT we have the release ofEurozone inflation numbers. While we saw some weaker-than-expected German inflation data yesterday, the Eurozone is unlikely to decline below the very weak 0.4 percent year-on-year CPI inflation predicted, with stronger Spanish inflation taking up some of Germany’s slack.

In the US, personal income and spending report due at 12:30 GMT will likely be the most important event on the US macro calendar. Consensus expectations are for a 0.4 percent gain on personal income with spending expected to have risen by 0.2 percent.

UK POLITICS

The odds of Ukip taking a second seat in parliament next week in the Rochester and Strood by-election have strengthened,with Paddy Power now offering 1/20 on Mark Reckless retaining the seat after defecting from the Conservative Party to Ukip at the Ukip party conference. TheConservative Party trails at 7/1, while Labour is offered at 40/1.

CHART OF THE DAY

Admittedly, this is a chart from 28 October, but it comes from Nanex Research and shows the new record for the most 10-year USTs in one second.

“On October 28, 2014, there were two monster sized trades in Treasury Futures, a 26000+ contract trade (sale) in the30-Year T-Bond (ZB) at  12:08:23and a 29000+ contract trade (buy) in the 10-Year T-Notes (ZN) at 12:17:42. We know the 10-Year trade set a record for most contracts traded in 1 second for that contract since at least 2005 (the 30-Year may have as well, but we haven't completed a thorough check of the data).

What made this event even more interesting,was that an equivalent huge order in the opposite direction first appeared 3minutes before the trade in the 30-Year and exactly 2 minutes before the trade in the 10-Year. That is, buy orders totaling about 27000 contracts started appearing in 9000 contract lots at 12:05:21 in the 30-Year - which were executed against by a large 26000+ contract sell order just over 3 minutes later, at 12:08:23. In the 10-Year, sell orders in lots of 9500 contracts started appearing at 12:15:42 and were executed against exactly 2 minutes later at 12:17:42. The two charts below show this sequence of events.”