- Wall Street’s top investment banks saw their financial fortunes diverge.
- Goldman’s fourth-quarter profit of $3.32 per share fell short of the Wall Street forecast of $5.48.
- The Bank of Japan maintained its ultra-easy monetary policy.
Equities fell after Goldman Sachs reported disappointing profits. Wall Street’s top investment banks saw their financial fortunes diverge, with Morgan Stanley profiting from more wealth management revenue and Goldman Sachs suffering from higher costs and a rise in rainy-day funds.
Goldman’s fourth-quarter profit of $3.32 per share fell short of the Wall Street forecast of $5.48. The bank reports brought the main US banks’ mixed fourth-quarter reporting cycle to a close.
On Wednesday, the Bank of Japan maintained its ultra-easy monetary policy, defying expectations that it would begin to wind down its enormous stimulus program.
The 10-year government bond yields exceeded the policy ceiling of 0.5% for a fourth session. This was due to speculation in the bond market that the BOJ would adjust the parameters for its yield curve control (YCC) at the meeting that ended on Wednesday.
However, the bank kept its ultra-low interest rates in place, including its 0.5% cap on the yield on 10-year bonds.
The 10-year yield achieved an intraday high of 0.51% before the BOJ announcement, then dropped as much as 15 basis points, the most since November 2023, to a low of 0.36%.
Meanwhile, defying the general decline in equities seen elsewhere, Japan’s Nikkei share index soared 2.5%, the greatest gain since mid-November.
97% of economists surveyed by Reuters believed the BOJ would maintain its ultra-easy policy at the meeting.
The BOJ surprised the markets a month ago by doubling the range for the 10-year JGB rate to 50 basis points on either side of 0%. Speculators were encouraged to test the BOJ’s commitment after the adjustment.
According to experts at Mizuho Bank, given the pressures brought on by the BOJ’s divergence from other countries’ monetary policies, raising interest rates above zero or altering the YCC is only a matter of time and execution.
German Chancellor Olaf Scholz stated on Tuesday at the World Economic Forum in Davos that he was confident Europe’s largest economy would not experience a recession.
After three years of epidemic isolation, China’s Vice Premier Liu He also embraced global investment and declared his nation open to the world after three years of epidemic isolation.
