Not wanting to be left out in the race to debase (and another reason to continue the 10yr gold bull market), the Japanese again intervened to weaken the yen, this time unilaterally after the joint global effort in March. To show the fruits of their labor, or lack thereof, the yen is weakening 3.5% to just shy of 80. The close on the day of the March intervention saw the yen close at 80.58. Outside of periodic drops, Yen intervention failed in ’03-’04, failed in Sept ’10, failed in March and will likely fail again. What is most likely to weaken the Yen over the next few years will be the country’s rebuilding after the disaster where many more goods and services will have to be imported, thus shrinking their trade surplus and the natural flow of yen back to them. The BoJ also increased the size of its asset purchase program and raised the amount that banks can borrow from them at a nominal rate. Spain sold debt maturing in ’14 and ’15 at yields just below 5% totaling 3.3b euros, a touch below the 3.5b max they hoped to sell. With a bid to cover above 2.0 for both, Spanish bonds are bouncing in response. Both the BoE and ECB left rates unchanged as expected. There is talk in Europe that the 2013 ESM of 500b euros that was supposed to replace the current EFSF, may supplement it instead to give almost 1T euros of combined size to deal with Italy and Spain.
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