Episode summary
BlackRock's Rieder Urges Hawkish BOJ Tilt to Boost Yen
Wall Street Week
· · 6 min · Hosts: David Westin · Guests: Rick Rieder
Summary
Rick Rieder argues that the yen’s weakness is being driven less by spot intervention than by expectations for Japan’s policy path. He says Japan’s large fiscal financing needs, combined with uncertainty over whether the Bank of Japan will raise rates or turn more hawkish, are the core issues. In his view, intervention can jolt markets, but it is not a durable solution unless monetary policy changes reinforce it.
Key takeaways
- Rick Rieder says yen support will be more credible if the Bank of Japan signals it is willing to raise rates and be hawkish when needed.
- He argues intervention alone is not durable because markets keep testing whether authorities have enough firepower to defend the currency.
- Rieder thinks the September move, or possibly December, could matter for stabilizing the yen.
- He says China has become a bigger influence than Japan on global markets and Treasury flows.
- Rieder sees persistent central-bank demand for gold as a sign that some reserve managers prefer gold over Treasuries at the margin.
Notable quotes
“you've got a tremendous amount of, uh, of fiscal that has to be financed”
“I think you got to get that policy. You've got to get monetary policy to replace a people believe that you're going to raise the rate”
“I would argue it's not the most the not the most durable way to get there”
“I think that is something we need a part of. Why I like gold as a as you own, a part of that in your portfolio”
“Today. We're relying much more than we ever have on domestic purchase”
How the episode opens
So there's been a lot of news about the Japanese yen and how it's been really under siege, going up over 160. As we speak right now. It's something under 160, but it's sort of up there.
Um, what is causing that? So a couple things. I mean, I think the the big deal is, you know, you've got it, you've got a tremendous amount of, uh, of fiscal that has to be financed.
And I think people worry about, you know, is and particularly is the Bank of Japan going to raise rate? Is the Bank of Japan going to be hawkish to support the currency? And heretofore they've been a bit deliberate in terms of moving it this moving in September to sort of stabilize the currencies a big deal.
Intervention. You know, I've watched intervention happen over time. You need to really keep going with a lot of firepower.
I would argue it's not the most the not the most durable way to get there. Markets, once they see it, they keep they open an eye towards it. But then they need to keep seeing it.
I think you got to get that policy. You've got to get monetary policy to replace a people believe that you're going to raise the rate. You're going to be hawkish when you need to be.
And I think out of Japan, we need to see that. And I think, you know, I think you're going to see a move in September. Maybe they wait till December, but I think it's I think that'll be important for the markets to stabilize.
The one thing I will say about Japan that's different than in the past and U.S., Japan. It used to be, I don't know, managing money a decade ago, two decades ago, the flows between Japan and the US were quite intense, obviously from a trade perspective, but also from a from a, uh, Treasury JGB perspective.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- yen
- boj hawkish signals
- currency market intervention
- japan monetary policy
- fixed income outlook
Companies and tickers mentioned
- BLK
- BlackRock Inc.
Watch the episode
Watch “BlackRock's Rieder Urges Hawkish BOJ Tilt to Boost Yen” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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