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Japan’s new regime

Japan has published the latest revision to their 4Q23 GDP number showing a 0.4% growth YoY, compared with the first print which showed a contraction. After averting a technical recession, there is speculation that the BoJ will end its aggressive Yield Curve Control policy, and consider a rate hike, in complete isolation vs vs the other developed economies central banks, which are more inclined to cut. The Nikkei and Topix indexes, which have showed an incredible performance over the last 14 years, as you can see below, fueled by easy money from the central bank, have just surpassed its historical maximum after 35 years. As with any other stimuli program, the bush question is how to unwind it, and what repercussions will it have on the equity indexes and the currency. If nothing else, more volatility is expected.

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