The currency markets, and specifically the Japanese Yen
saw a major reversal following last nights surprise announcement.
The Yen moved to it's highest level in weeks, and at one point it
was the biggest one day single gain vs. the dollar of the year.
The move was accelerated by a round of central bank intervention to
help the Yen higher. The BOJ decided that combining dollar selling
with the news of this new tax plan would likely have maximum impact
on the dollar. While we did see significant gains in the Yen, the
question is whether the momentum can last without any new gov't
policies. The Japanese gov't needs to make some fundamental changes
to restructure the banking and brokerage business. Until they do that, these band-aid solutions, (interventions) are only going to last so long.
The dollar was one factor movings bonds lower overnight. The proposed
package out of Japan could have the effect of re stimulating their
economy, which has implications for interest rate policies as well.
In the short term, we were overbought, some profit taking today.
Overall the trend in the bond market is to the upside. Bonds down 11/32.
Trend indicators in the stock market are still pointing lower,
rallies are selling opportunities. S&P down 5.10 to 975.30.
The fall in the dollar vs. the Yen again was the major factor
moving gold prices higher. Platinum sharply higher, as you mentioned.
This was a case of short covering, not new long buying into the
market. Some inflationary implications from a tax cut the size of
the one that Japan is proposing. The Japanese are the largest
buyers of platinum, and that is why platinum was the biggest gainer
in the precious metals markets today. Jan platinum gained 13.40
to close at $354, silver up .003 at $5.968. Feb gold up $5.70
at $291.10. Could see a turn around in the gold market. Silver
has lead the way up. We could see people who bought the silver
and sold gold getting out of those positions, and that could give
gold a short term boost.
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