Skip to Content
Investing Specialists

Central Banks Take Center Stage Again

The market may cheer more free money for all, until the reality of Japan's issues gets a second look.

Mentioned: ,

Yet again, central bankers managed to trump business and economic fundamentals. Most major regional equity markets were up close to 3% for the week. Even commodities were slightly higher, up about 0.7%. Meanwhile, U.S. interest rates were up just a smidge, with the 10-year U.S. Treasury bond moving from 2.27% to 2.33%, despite the fact that the Fed announced a complete end to buying additional bond and mortgage securities.

Japan picked up the monetary easing baton on Friday, completely shocking markets. Japan announced a pickup in the level of its bond purchases by about a third, representing a significant expansion. Taking matters more directly into the government's own hands, the Japanese Government Pension Investment Fund announced that it would be shifting more of its purchases to equities in both Japan and around the world. Why wait for lower rates to drive up equity markets and create a wealth effect when it is even easier and more assured if they buy those equities directly? Although the central bank doesn't directly control the central pension fund, the simultaneous moves represent a new chapter in quantitative easing, namely, not just buying bonds, but stocks.

Robert Johnson, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.