Tuesday, January 27, 2009

Update on the Japan Market as of 1-26-2009

Economic data and events this week once again pointed to a sharp deterioration in the economy and unusual financial conditions. Trade statistics for December reveal a continuing, historic nosedive in exports, while the Senior Loan Officer Survey indicates that key capital markets remain dysfunctional and banks are tightening lending standards. In this context, the Bank of Japan (BoJ) decided to assume more credit risk in order to support corporate financing, while revising down its growth/inflation outlook substantially. However, we are skeptical that the BoJ’s “credit easing” will have a meaningfully positive impact on overall financial conditions. 


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