I don't envy Kazuo Ueda.
The Bank of Japan governor faces the task of unwinding the world's most-aggressive policy of QE and ultra-easy rates in the world's most-indebted country.
He took a small step towards less-aggressive policy on Tuesday and that has helped to prop up the yen. Earlier today, Reuters reported that the BOJ will "look to exit the decade-long accommodative regime sometime next year" but it will be tough. The report cites interviews with six sources familiar with BOJ thinking.
"Given uncertainty over the economic outlook, the BOJ probably wants to wait at least until spring next year in normalising policy," said another source. "If so, it makes sense to keep the BOJ's guidance dovish."
The aim will be to do it gradually. So far the trend has been to leak larger steps and then announce smaller ones and that's kept both the FX and bond market off balance. The report today helped to send USD/JPY through 150.00 and down to 149.85 but it's since rebounded to 150.44. A big portion of that is from the US dollar side as it weakens broadly following the Fed and Treasury refunding announcement.
The BOJ path is fraught with pitfalls. The bond market could puke or the currency could fall further. It also depends on a benign broader risk trade and decent domestic and global growth.
Right now, the US bond market is helping and if yields continue to drop, it will make it much easier for the BOJ.
