None of the names touted as the next Bank of Japan chief command the same authority in markets as Governor Haruhiko Kuroda, which will invite some investors to push even harder for higher bond yields, according to John Vail, chief global market strategist for Nikko Asset Management.
(Bloomberg) — None of the names touted as the next Bank of Japan chief command the same authority in markets as Governor Haruhiko Kuroda, which will invite some investors to push even harder for higher bond yields, according to John Vail, chief global market strategist for Nikko Asset Management.
“None of them are probably as dovish as Kuroda, in terms of resolve,” he said of potential successors. “Philosophically, they might be in the same vein but they don’t have the same gravitas to continue to do such action as he has under tremendous pressure,” according to Vail, whose experience in Japan spans more than three decades.
A recent poll of economists by Bloomberg identified Deputy Governor Masayoshi Amamiya, former Deputy Governor Hiroshi Nakaso, Government Investment Pension Fund Chairman Hirohide Yamaguchi, Asian Development Bank head Masatsugu Asakawa and the BOJ’s other current deputy governor, Masazumi Wakatabe, among the most likely potential successors.
Kuroda, whose term ends in April, showed repeatedly that he could stare down investors, strike a different path to his global peers and take markets by surprise with bold changes to policy.
Even Wednesday, with some traders baying for the BOJ to tighten policy, Kuroda presided over a sharp drop in the key 10-year bond yield while leaving his monetary settings unchanged.
“For some traders, they’ve been taught a lesson,” said Vail.
With inflation peaking out, there is some reason to think next governor won’t be in a hurry to undo Kuroda’s settings, he said. The new chief will have to hope that some of the market’s wariness won’t be undone quickly either, Vail noted.
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