BoJ Morons and Mrs Watanabe

TS Lombard argues that the Bank of Japan's recent hawkish stance and the slowing of retail outflows suggest the Yen is near its peak. They maintain that market concerns over Japan's fiscal sustainability are overblown, citing a trending zero primary deficit and the BoJ's intervention tools.

Key Takeaways

• 1.The Bank of Japan (BoJ) delivered a hawkish hold, raising inflation and growth projections with a base case for the next hike in July.
• 2.Market fears regarding Japan's fiscal sustainability (the 'moron risk premium') are considered overblown by the author.
• 3.The Japanese Yen is believed to be near a cycle top as retail portfolio outflows begin to slow.

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