When it comes to future developments in Asia’s biggest economies, the market can’t help setting itself up for disappointment.
For months now, traders have tied themselves in knots over when China might exit from "COVID zero." They first expected the country to let up after the Winter Olympics were over, then after October’s National Congress and coronation for Xi Jinping’s third term. Now, some see it happening perhaps in spring next year, if you believe screenshots shared online. All the while, the message from policymakers has been unmistakable: there’s no change coming.
A similar expectation has crept into thinking around the Bank of Japan. An exit from negative rates and/or yield-curve control was inevitable (many said) earlier this year as the yen weakened. When that failed, surely when the currency tumbled to ¥150 against the dollar. Well if not then, certainly when Gov. Haruhiko Kuroda’s replacement arrives next April.