There is no question the BoJ likes to keep the market guessing, but I suspect, in retrospect, with JPY buying flows out of Tokyo muted during the past few days, perhaps the writing was on the wall.
Still, with the manufacturer's DI in the January Reuters Tankan falling -14 points mom to -6 and turning negative for the first time since January 2021, along with private sector core machinery orders looking gloomy, the moribund run of recent economic data may have given the BoJ pause for a cause on the YCC thereby holding the JPY in check until exports improve.
But with the policy cat out of the proverbial bag, it will likely be only a matter of time before markets are back in testing the BoJ's resolve.
The good news is with the BoJ in the rear-view mirror, we can back generating alpha again where a lot of good investment opportunities are opening up against the backdrop of improving growth in both China and Europe and, frankly, the US, too, if we blot out the sentiment indexes.
The combination of lower gas prices and faster China re-opening has contributed to investors' re-assessment of Euro Area risks - over the past two weeks, European equities have registered positive flows for the first time since the Russian invasion of Ukraine.
A large part of the recent inflows into European equities have been initially driven by domestic investors, who were the most bearish on Europe last year.
However, last week's foreign investors' inflows have been robust, supporting the EUR/USD. The recent reversal in the strong US dollar rally likely represents a further tailwind for European and non-US assets, especially for US-based investors.
We could be entering a turning point for global equity fund flows: inflows into US equities are decelerating while they are picking up in China, the rest of Asia, and Japan.
There is likely a string of cases for a more meaningful acceleration in non-US equity flows in 2023, as diversification has historically proven more correlated when the market has cleared the dollar peak.