EFTA02481791.pdf

From: jeffrey E. <[email protected]> Sent: Friday, October 30, 2015 4:18 PM To: Richard Kahn Subject: Fwd: JPY Call Daniel Saba Forwarded messa:e ---_------ From: Barrett, Paul S Date: Friday, 30 Oct=ber 2015 Subject: JPY To: "Jeffrey Epstein ([email protected] <mailto:[email protected]> )"<[email protected]> Cc: Barrett Team Brad Wechsler Jeffrey I am not sure it goes to 110 but long JPY = short KRW still makes sense. Paul =U> Global Rates & FX Research BoJ changed reaction function, not preemptive any more: Bo.' to hold =ntil Nov.2016 & USD/JPY may break 110 <Monetary Policy> * =C2* The BoJ did not ease tod=y, even though the Bank revised down GDP and inflation outlook and pushed =ut the timeline of achieving 2% inflation target.=u> EFTA_R1_01598269 EFTA02481791 * =C2* The details of Outlook Report and Ku=oda's comments at the press conference were rather downbeat. The B=J's policy does not appear preemptive any more. * =C2* We now believe that the BoJ will eas= in November 2016, when the BoJ is expected to push out the time line agai=, although earlier easing is possible. • =C2• Kuroda remained confident that there=the Bol has plenty of tools for additional easing, including an increase i= JGB purchases. <Forei=n Exchange> * =C2* We continue to see that USD/JPY has =lready hit the peak of this year and the pair is likely to see a down ward=trend toward next year. * =C2• Given that we pushed back forecast o= the timing of additional easing by the BoJ to November 2016, we revised d=wn our forecast of USD/JPY across forecast period: to 113 from 115 in 3Q16. * =C2* We think there is a risk that the US=/.IPY breaks 110 before the BoJ eases their monetary policy again on Novemb=r 1st 2016. * =C2* The important factors for our view a=e: the significant improvement in current account surplus, the higher fund=ng cost of JPY, Japanese authorities' preference and possible unwinds of large foreign asset investments by Japanese.=/u> cJGB&g=; * =C2* We continue to expect that the upsid= of JGB yields to be limited, regardless of the Boles inaction; th= most of domestic investors did not expect additional easing, additional easing expectations should remain given our forecast of lower U=D/JPY, and calendar-base JGB issuance will be reduced. * =C2* We instead change the view about the=expected path of JGB yield curve; while we continue to expect flattening, =he move would be gradual. <Equit=> * =C2* Although about a half of the market =ad expected the BoJ to ease further, the initial reaction was surprisingly=tame. With the BoJ out of the way, the focus will likely be on relative values going forward. With the government reportedly=eyeing Y3 trillion supplementary budgets, the themes are likely cente=ed around supplementary-budget-related and earnings-related sectors and st=cks. * =C2* Long-term prospect is less certain g=ven we expect JPY to appreciate going forward. Click here <https://markets.jpmorgan.com/research/email/pufu8f0b/ws0z1=aDs7aUCBn6gbooGA/GPS-1857160-0.pdf> for the full Note and disclosures. <=p> Tohru Sasaki (AC) <http://emaill=nk.jpmorgan.com/t/AOJAAjC1g/ABGDsw/aSEW-A/WA/ABTN7g/AQ/zTRS> <=> 2 EFTA_R1_01598270 EFTA02481792 JPMorgan Chase Bank, N.A., =okyo Branch Takafumi Yamawaki <http://emaill=nk.jpmorgan.com/t/ACVAAjC1g/ABGDsw/aSEW-A/WA/ABRfoA/AQ/clof> <=> JPMorgan Securities Japan Cr., Ltd. Masaaki Kanno <http://emaill=nk.jpmorgan.com/t/AOJAAjClg/ABGDsw/a5EW-AMA/AEsFRQ/AQ/hRny> </a JPMorgan Securities Japan C=., Ltd. Visit J.P. Morga= Markets <http://emaillink.jpmorgan.com/t/ACVAAjC1WABGDsw/aSEW-A/WA=ACBgKg/AOJaVhw> for more market-leading research and financial=solutions across the full trade and investment lifecycle. If you no longer wish to receive these e-m=ils then click here=to unsubscribe <http://emaillink.jpmorgan.com/t/AOJAAjC1g/ABGDsw/aSEW-A/WA=ACgrng/AQ/KaSB> www.jpmorganmarkets.com=/b> <http://=maillink.jpmorgan.com/t/ACVAAjC1g/ABGDsw/aSEW- A/WA/ACBgKWACilaVhw> =1span> Analyst certificatio=: I certify that: (1) all of the views expressed in this research accurate=y reflect my personal views about any and all of the subject securities or=issuers; and (2) no part of my compensation was, is, or will be directly or 3 EFTA_R1_01598271 EFTA02481793 indirectly related to the specific recomme=dations or views expressed herein. Important disclosures, including price =harts, are available for compendium reports and all J.P. 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