Daily Agenda: Bank of Japan Holds Tight

Ahead of FOMC, BOJ decides to focus on yield curve; OECD lowers global GDP outlook; Microsoft announces share repurchase; SEC probes Exxon environmental accounting.

Bank of Japan

TOKYO JAPAN - MAY 9, 2015: Bank of Japan. Bank of Japan is the central bank of Japan which is often called Nichigin for short.

The Bank of Japan issued a monetary statement today that surprised some market observers because it included no change in interest rates or the total notional amount of easing. Instead, the Bank of Japan said that it will alter the monthly volume of asset purchase and focus on controlling the yield curve. While Bank of Japan governor Haruhiko Kuroda brushed aside questions during an accompanying press conference over whether he and his team have reached the limits of policy action, many analysts noted that the central bank now owns more than a third of bonds issued by the Japanese government. After the statement, the yen fell slightly versus the U.S. dollar, Japanese ten-year government bond slid to a positive yield for the first time in six months and stocks rose sharply during late trading in Tokyo. For banks, the news was welcome relief. In recent weeks, many Japanese bankers have argued that the current negative-rate environment is destroying the ability of lenders to achieve positive returns. Investors now turn their attention to the U.S. and the Federal Open Market Committee announcement later today, with many still asking whether the end of global central bank intervention has finally arrived.

OECD lowers forecasts. In a report issued today, the Organization for Economic Cooperation and Development cut global GDP projections for 2016 and 2017 to 2.9 percent and 3.2 percent, respectively, a reduction of 0.1 for both. According to the Paris-based body, slowing global trade is a primary driver for the lower outlook. The report warned that the current climate of protectionist political rhetoric in many countries threatens to further curb growth.

FedEx beats forecasts. Yesterday FedEx Corp. released financial results after equity markets closed, besting consensus analyst estimates. The global delivery giant reported earnings per share of $2.90 for the first fiscal quarter, well above Wall Street targets. Full-year earnings projection by management fell short of expectations, but only after being subject to adjustment for pension liabilities.

Microsoft to repurchase shares, increase dividend. Microsoft Corp. unveiled plans yesterday to repurchase stock in an amount that, at current value, would account for 10 percent of the current shares outstanding. The firm also pledged to increase the dividend to shareholders by three cents a quarter, to 39 cents per share, up 8 percent. The company intends to conclude the share repurchase program before year end.

SEC looks at Exxon over climate-change accounting. Media outlets reported today that the U.S. Securities and Exchange Commission has begun a formal probe into the accounting employed by ExxonMobil Corp. for future environmental liabilities, a potentially significant change in regulatory focus. The investigation comes on the heels of a similar study launched by the New York Attorney General’s office last year.

China Postal Savings Bank raises over $7 billion in IPO. Postal Savings Bank of China debuted as a public company in Hong Kong today, with an initial public offering that raised more than $7 billion, making it the largest IPO of 2016. Shares will begin trading freely on September 28. The bank plans to invest the proceeds into expansion, as China’s middle class grows and requires more financial services.