There is another heavyweight news coming from China and the United States!
Chinese Foreign Ministry spokesperson Wang Wenbin presided over a regular press conference on November 2nd. A reporter asked: According to reports, China will hold nuclear arms control talks with US officials next week. Can China confirm the relevant information? Wang Wenbin stated that China and the United States will hold departmental level arms control and non-proliferation consultations in Washington next week, with the head of the Arms Control Department of the Ministry of Foreign Affairs leading a delegation to attend.
Shortly after the close, foreign media CNBC suddenly reported that Japan would withdraw from its negative interest rate policy in January 2024. This prediction comes from Deutsche Bank economist Sameer Goel. As soon as this news was released, the US dollar plunged more than 30 basis points against the Japanese yen in the short term. From yesterday's interest rate discussion by the Bank of Japan, it can be seen that the original policy remains unchanged, which has also stimulated global market strength. If Japan truly exits in January next year, the impact will still be inevitable.
It is worth noting that Japanese Finance Minister Junichi Suzuki subsequently stated that Japan has not yet reached a state where it can be said that deflation will not return. The government will continue to follow the joint statement with the Bank of Japan. According to Xinhua News Agency, the Japanese government held an interim cabinet meeting today and approved an economic stimulus plan, including tax cuts, totaling over 17 trillion yen (approximately 113 billion US dollars) to address economic issues such as domestic inflation.
Heavy news from China and the United States
According to a report by the Wall Street Journal on Wednesday local time, China and the United States will discuss nuclear arms control next week, marking the first such meeting since the Obama administration took office. According to the report, these arms negotiations will be chaired by senior State Council official Mallory Stewart and Director of the Arms Control Department of the Chinese Ministry of Foreign Affairs, Sun Xiaobo, next Monday.
Today, at a regular press conference held by the Ministry of Foreign Affairs, a reporter asked: According to reports, China will hold nuclear arms control negotiations with US officials next week. Can China confirm the relevant information?
Foreign Ministry spokesperson Wang Wenbin said that recently, we have introduced the visit of Wang Yi, a member of the Political Bureau of the Communist Party of China Central Committee and Minister of Foreign Affairs, to the United States. During Foreign Minister Wang Yi's visit to the United States, both sides agreed to hold a series of consultations in the near future, including those on arms control and non-proliferation. China maintains close communication with major countries around the world on arms control and non-proliferation issues.
China and the United States will hold departmental level arms control and non-proliferation consultations in Washington next week, with the head of the Arms Control Department of the Ministry of Foreign Affairs leading a delegation to attend. According to the arrangement agreed upon by both parties, China and the United States will engage in dialogue and exchange on a wide range of topics such as the implementation of international arms control treaties and non-proliferation.
In 2021, U.S. National Security Advisor Jack Sullivan stated that the heads of state of China and the United States have agreed to "seek to begin discussions on strategic stability. But the White House quickly stated at the time that this discussion was different from the formal arms reduction negotiations between the United States and Russia.
Daryl Kimball, Executive Director of the Washington based Arms Control Association, stated that the delayed arms negotiations may focus on improving transparency in nuclear doctrines and more effective crisis communication channels among countries.
According to the website of the Ministry of Defense today, Colonel Shi Yi, a spokesperson for the Eastern Theater Command, stated that on November 1st, the US destroyer "Peralta" and the Canadian frigate "Ottawa" crossed the Taiwan Strait and made public speculation. The Eastern Theater Command of the People's Liberation Army of China has organized sea and air forces to monitor and guard the entire process, and handle them in accordance with the law and regulations. Theater forces always maintain high vigilance and resolutely defend national sovereignty, security, and regional peace and stability.
Major Changes in Japan
After today's trading session, there were suddenly significant changes coming from Japan: According to CNBC, Deutsche Bank economist Sameer Goel stated that the Bank of Japan "must lift" negative interest rates and predicted that the Bank of Japan will take policy measures in January 2024. Subsequently, there were fluctuations in the foreign exchange market, with the US dollar plunging more than 30 basis points against the Japanese yen in the short term.
Yesterday, the Bank of Japan decided at its monetary policy meeting to adjust the upper limit of its long-term interest rate control target from 0.5% to 1% and allow it to exceed 1% to some extent. Since the end of last year, in response to the pressure of yen depreciation, the Bank of Japan has gradually relaxed its long-term interest rate control target, gradually expanding its upper limit from 0.25% to 1%.
Bank of Japan Governor Kazuo Noda stated at a press conference after the meeting that increasing the flexibility of monetary policy is an appropriate approach in the face of high uncertainty. The Bank of Japan also announced that it will continue to maintain short-term interest rates at a negative 0.1% level. Kazuo Ueda emphasized that he will continue to implement ultra loose monetary policy, as although the current increase in Japan's core consumer price index is higher than the 2% target set by the central bank, its sustainability is currently uncertain.
Afterwards, the yen weakened significantly. However, in this context, the highest foreign exchange official of the Japanese Ministry of Finance issued one of the strictest warnings to date, stating that the authorities are prepared to intervene in the foreign exchange market to prevent the yen from falling. Subsequently, today's result was that the yen began to rebound. But there is a problem that the inflation target achieved by Japan's current monetary easing policy is not due to its economic development, but rather to imported inflation. That is to say, the consequence of Japan's monetary policy may be stagflation.
In this context, the Bank of Japan may need to adjust its asset structure, and abandoning YCC (Yield Curve Control) target management is the first step. If the Bank of Japan does indeed lift negative interest rates, then the yen carry rate may experience significant fluctuations. According to data, the sustained low interest rates in Japan since the 1990s have made the Japanese yen the preferred lending currency for international carry trades. Carry trading refers to the transaction of exchanging low interest currency for high interest currency, and deducting the cost of foreign exchange lock-in to obtain higher returns than holding low interest currency. After the 1990s, Japan's sustained low interest rates formed a high interest rate gap with countries such as the United States and Australia. At the same time, as a developed economy with open financial capital and strong economic strength in export trade, Japan has high liquidity in global financial markets. The combination of low interest rates and high liquidity has made the Japanese yen the preferred choice in international carry trading. The cessation of yen carry trading will further make it difficult for real interest rates to rise or fall, and international stock markets will still be under pressure.