Forex Fash: Will investors buy on Japan's policy facts? - Nomura

In the investment community, 'buying the rumour and selling the fact' is a usual practice, the clearest example being the rise in USD/JPY and the Nikkei this year. According to Richard Koo, chief economist at Nomura, "whether investors will “buy on the fact” will depend on remaining two initiatives."

Mr. Koo notes: "Investors have often bought stocks and sold the yen on BOJ easing, but these were almost always cases of buying on the rumor and did not last for long. This time, however, the government is preparing two more initiatives to strike at the heart of the problems facing Japan’s economy."

"If they constitute a meaningful policy response, I think it is conceivable that investors would buy on the fact as well. It is therefore critical for the future of Japan and its economy that the government unveil the second and third pillars of its plan
as soon as possible, and that they contain truly substantive measures" the economist concludes.