Archived IMT (2008.10.30)

Back to those Japanese rate cut expectations. Odds of a Friday cut from the Bank of Japan are dwindling given the tone of the latest press reports from Japan. A Friday cut is now unlikely due to the prolonged gains in US equities. Japan is better to hold rates steady considering their already low levels and the prospects for renewed carry trades in the event of renewed easing. A DISAPPOINTMENT FROM NO RATE CUT may be reflected in Friday's European and US stocks, hence for fresh risk aversion. SEPARATELY, SAN FRANCISCO FED's YELLEN shed light on the possibility that US rates could drop below 1.00%. Stay tuned for morning's EUROZONE OCTOBER FLASH CPI (6 am EST), expected to drop to as low as 3.1% from 3.6%, thus bolstering the story of falling inflation and escalating odds of an ECB cut next week. Negative bias for EUR and GBP.