Japanese stocks fall again but politics points toward weaker yen

Remember that the new government of Prime Minister Shinzo Abe faces elections for the upper house of Parliament in July. Abe’s party, the Liberal Democrats, currently does not have a majority in the upper house (the House of Councillors) of the Diet. Abe very much wants to win a majority in the upper house because that would diminish the power of opposition parties to block his legislative program.

Bank of Japan puts off big asset buying until January 2014 temporarily reversing the yen’s decline

Today the Bank of Japan gave in to political pressure and raised its inflation target to 2% from 1% as “recommended” by Japan’s new Prime Minister Shinzo Abe. But the bank delayed a huge program ($146.6 billion a month) of asset purchases until January 2014. Today’s market reaction in Tokyo says investors think the delay is very temporary