Wednesday’s Other Central Bank Meeting Might Be the One to Watch
The Bank of Japan will announce an interest-rate decision on the same day as the Fed, with big consequences
3 min
All eyes will rightly be on the Federal Reserve’s interest-rate decision Wednesday. But the meeting of another central bank across the Pacific will be quite consequential too.
While Jerome Powell is pondering whether to cut rates now for the first time in more than four years or perhaps wait a couple more months, Kazuo Ueda , his counterpart in Japan, is considering whether to do the opposite . After the Bank of Japan exited its negative-interest-rate regime in March, investors are looking for more tightening to come.
The Bank of Japan raised its short-term interest rate from minus 0.1% to a range of around 0% to 0.1% in March, the first increase in 17 years. Japan’s consumer prices rose 2.8% year-on-year in June, which was off from inflation’s peak pace last year, but still well higher than Japan is accustomed to.
In a possible preview of what awaits markets if the Bank of Japan leans hawkish, the Japanese yen has risen sharply in the past few weeks, appreciating 5.2% against the dollar this month from a multi-decade low. That has likely contributed to market turmoil in other markets around the world over the past couple of weeks, including the selloff in global technology stocks, as the yen, with its low interest rates, is a favourite funding currency for traders .
Hedge funds have ramped up their short bets on the yen in the past two years but could exit their positions pretty abruptly. Leveraged funds have slashed their net short position in options and futures against the yen by half in the two weeks ended July 23, according to data from Commodity Futures Trading Commission via CEIC. That is equal to a nominal value of $4.6 billion.
But the market is divided over whether a Japanese rate increase could come as soon as this week. There is a 41% probability that the Bank of Japan could raise rates by 0.15 percentage point, inferred from pricing of overnight indexed swaps, according to Bank of America.
At the meeting this Wednesday, the Bank of Japan is also expected to outline plans to unwind its portfolio of $3.8 trillion in Japanese government bonds, likely giving a further boost to long-term rates. Japan’s 10-year government bond yields have gone up 0.44 percentage point to around 1.06% this year as investors expected higher rates.
The country was swimming against the tide over the past few years by staying put on its ultra-easy monetary policies when most major central banks were raising rates. The Bank of Japan will likely be more cautious going in the opposite direction: A sharply higher yen could be punishing to exporters , and policymakers in Japan live in perpetual fear of returning to deflation. Any surprises in the BOJ’s pace as it normalises policy could still rattle financial markets.
Over the longer term, a narrowing interest-rate differential between the U.S. and Japan could shift the pattern of investment flows. Japan had the equivalent of $4 trillion in foreign portfolio investments at the end of 2023, according to official data. That includes both companies and individuals which are scouring the globe for higher returns. Some of them might bring their money back to Japan if assets at home are generating higher yields, especially if the yen is getting stronger.
U.S. 10-year government bonds still yield around 3.1 percentage points more than Japanese ones, but that is already down from a 4.2-percentage-point gap in October. If that gap keeps narrowing, it could mean tighter financing conditions in markets around the world, which have long looked to Japan as a steady buyer.
It is rare for two of the world’s largest central banks to be at major turning points in their long-term policy settings at the same time, and rarer still for them to be moving in opposite directions. The consequences could be far-ranging and unpredictable. Investors around the world will have to get used to paying more attention to what is happening in Tokyo, not just Washington, D.C.
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The lunar flyby would be the deepest humans have traveled in space in decades.
4 min
It’s go time for the highest-stakes mission at NASA in more than 50 years.
On April 1, the agency is set to launch four astronauts around the moon, the deepest human spaceflight since the final Apollo lunar landing in 1972.
The launch window for Artemis II , as the mission is called, opens at 6:24 p.m. ET.
National Aeronautics and Space Administration teams have been preparing the vehicles to depart from Florida’s Kennedy Space Center on the planned roughly 10-day trip. Crew members have trained for years for this moment.
Reid Wiseman, the NASA astronaut serving as mission commander, said he doesn’t fear taking the voyage. A widower, he does worry at times about what he is putting his daughters through.
“I could have a very comfortable life for them,” Wiseman said in an interview last September.
“But I’m also a human, and I see the spirit in their eyes that is burning in my soul too. And so we’ve just got to never stop going.”
Wiseman’s crewmates on Artemis II are NASA’s Victor Glover and Christina Koch, as well as Canadian Space Agency astronaut Jeremy Hansen.
What are the goals for Artemis II?
The biggest one: Safely fly the crew on vehicles that have never carried astronauts before.
The towering Space Launch System rocket has the job of lofting a vehicle called Orion into space and on its way to the moon.
Orion is designed to carry the crew around the moon and back. Myriad systems on the ship—life support, communications, navigation—will be tested with the astronauts on board.
SLS and Orion don’t have much flight experience. The vehicles last flew in 2022, when the agency completed its uncrewed Artemis I mission .
How is the mission expected to unfold?
Artemis II will begin when SLS takes off from a launchpad in Florida with Orion stacked on top of it.
The so-called upper stage of SLS will later separate from the main part of the rocket with Orion attached, and use its engine to set up the latter vehicle for a push to the moon.
After Orion separates from the upper stage, it will conduct what is called a translunar injection—the engine firing that commits Orion to soaring out to the moon. It will fly to the moon over the course of a few days and travel around its far side.
Orion will face a tough return home after speeding through space. As it hits Earth’s atmosphere, Orion will be flying at 25,000 miles an hour and face temperatures of 5,000 degrees as it slows down. The capsule is designed to land under parachutes in the Pacific Ocean, not far from San Diego.
Is it possible Artemis II will be delayed?
Yes.
For safety reasons, the agency won’t launch if certain tough weather conditions roll through the Cape Canaveral, Fla., area. Delays caused by technical problems are possible, too. NASA has other dates identified for the mission if it doesn’t begin April 1.
Who are the astronauts flying on Artemis II?
The crew will be led by Wiseman, a retired Navy pilot who completed military deployments before joining NASA’s astronaut corps. He traveled to the International Space Station in 2014.
Two other astronauts will represent NASA during the mission: Glover, an experienced Navy pilot, and Koch, who began her career as an electrical engineer for the agency and once spent a year at a research station in the South Pole. Both have traveled to the space station before.
Hansen is a military pilot who joined Canada’s astronaut corps in 2009. He will be making his first trip to space.
Koch’s participation in Artemis II will mark the first time a woman has flown beyond orbits near Earth. Glover and Hansen will be the first African-American and non-American astronauts, respectively, to do the same.
What will the astronauts do during the flight?
The astronauts will evaluate how Orion flies, practice emergency procedures and capture images of the far side of the moon for scientific and exploration purposes (they may become the first humans to see parts of the far side of the lunar surface). Health-tracking projects of the astronauts are designed to inform future missions.
Those efforts will play out in Orion’s crew module, which has about two minivans worth of living area.
On board, the astronauts will spend about 30 minutes a day exercising, using a device that allows them to do dead lifts, rowing and more. Sleep will come in eight-hour stretches in hammocks.
There is a custom-made warmer for meals, with beef brisket and veggie quiche on the menu.
Each astronaut is permitted two flavored beverages a day, including coffee. The crew will hold one hourlong shared meal each day.
The Universal Waste Management System—that’s the toilet—uses air flow to pull fluid and solid waste away into containers.
What happens after Artemis II?
Assuming it goes well, NASA will march on to Artemis III, scheduled for next year. During that operation, NASA plans to launch Orion with crew members on board and have the ship practice docking with lunar-lander vehicles that Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin have been developing. The rendezvous operations will occur relatively close to Earth.
NASA hopes that its contractors and the agency itself are ready to attempt one or more lunar landing missions in 2028. Many current and former spaceflight officials are skeptical that timeline is feasible.
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