No, it does not make sense from strict interest rate perspective. But you have not asked yourself if Japan lowering it's short rate by 10bp actually makes any difference. There are other reasons why the Yen is strengthening. The answers are all over the Web and easy to find. Come on, Miz...do some work on your own! Edit: OK, dude, let me give you a hand so you won't be constantly starting these basic threads. Buy yourself a copy of the following book: http://www.amazon.com/Money-Financi...6703/ref=sr_1_1?ie=UTF8&qid=1286415370&sr=8-1
Come on! Why don't you directly say what the other reasons are? I am a newbie of course my threads are basic. But the Silver readings you gave me weren't indepth analysis either...
Let me be brutally honest with you. You are operating in this business without the slightest bit of necessary background in basic financial concepts. Seems like you have been posting here and on Wilmott for a few years now and yet you still are asking questions about stuff that a person who has spent only a few months in the business would know cold. As a yardstick, we just hired a guy six months ago with no financial background (a computer science guy, btw) and he can now talk extemporaneously on the subject of BOJ operations for 15 minutes (if I let him). This is the best advice you will get: buy yourself a bunch of books on basic finance, economics, statistics, etc and just read them cover to cover (more than once). Then, and only then, come back to the markets. It is clear that you just don't have the basic tools necessary to even start to get involved in the game. And, really, supposedly you work on a trading desk and you don't know the answer to this question? I understand a lot of the guys on this board not getting the Japan thing, but that's because they are isolated day traders with no formal experience. And, yet, there are a good number that seem to have a pretty good idea of what's going on. One more thing. I have come across lots of guys over the years that have not "gotten" the markets. Smart guys, but just don't have the makeup to be in business. No shame in that. Actually, a couple have gone on to have very successful careers in doing other things (one person actually makes loads more money than most traders I know). Be honest with yourself.
Sorry if you don't want to help please stop. It's not helpful to impose things on other people. I spent most of time programming that's my job mandate. Everything else is out of my curiosity. And I don't think I have time to read those books. Btw those are Econ 101 stuff. Ps. our MBAs can talk BOJ for hours and days, but it doesn't prevent them from losing hundreds of millions of dollars... Economists can blow you away with all theories, do you think they can make money? People who can make money don't measure by talking BOJ... So, please directly answer my questions and please be respectful to other people's job mandate and situation. Again, I don't have time to argue with you. Looks like you are similarly bad-temped and impatient like our losers traders...
Methinks a Balance Sheet Recession may have something to do with it. http://www.amazon.com/Holy-Grail-Macroeconomics-Lessons-Recession/dp/0470823879
Make it easy for you and your guys. Short CME JPY futures and hedge yourself with OTM calls. Vola expectations ( maybe derived from historical data ) or even modern expected volatility formulas ( you can find them on the net ) - will help you. China has been a more aggressive buyer of JGB´s this year and haven´t you read about the FED´s QE II threat ? Basically, we are talking about USD WEAKNESS.
to add to sus's point, this isn't your garden variety QE2 the market is expecting. this is open monetization by the fed this time, as the fed will become the number 1 (theyre already number 2) holder of US Treasuries in the world. check this article out, and be very very afraid. http://www.zerohedge.com/article/one-fed-monetize-them-all
From time to time, I am simply short T Bond Futures / T Notes just out of "fun"...despite the FED´s "threats". Of course short at appropriate levels...;=)