<table><tr><th>From: </th><th>jeffrey E. &lt;jeevacation@gmail.com&gt;</th></tr><tr><td>Sent: </td><td>Friday, October 30, 2015 4:18 PM</td></tr><tr><td>To: </td><td>Richard Kahn</td></tr><tr><td>Subject: </td><td>Fwd: JPY</td></tr></table>

Call Daniel Saba

Forwarded message
From: Barrett, Paul S
Date: Friday, 30 October 2015
Subject: JPY
To: "Jeffrey Epstein (jeevacation@gmail.com <mailto:j=evacation@gmail.com> )" <jeevacation@gmail.com>
Cc: Barrett Team
Brad Wechsler

Jeffrey

I am not sure it goes to 110 but long JPY = short KRW still makes sense.

Paul

=u>

Global Rates & FX Research

BoJ changed reaction function, not preemptive any more: BoJ to hold =ntil Nov.2016 & USD/JPY may break 110

## <Monetary Policy>

* =C2* The BoJ did not ease tod=y, even though the Bank revised down GDP and inflation outlook and pushed =ut the timeline of achieving 2% inflation target.=u>

## <Monetary Policy> (cont.)

* =C2* The details of Outlook Report and Ku=oda's comments at the press conference were rather downbeat. The B=J's policy does not appear preemptive any more.

* =C2* We now believe that the BoJ will eas= in November 2016, when the BoJ is expected to push out the time line agai=, although earlier easing is possible.

• =C2• Kuroda remained confident that there=the Bol has plenty of tools for additional easing, including an increase i= JGB purchases.

## <Forei=n Exchange>

* =C2* We continue to see that USD/JPY has =lready hit the peak of this year and the pair is likely to see a down ward=trend toward next year.

* =C2• Given that we pushed back forecast o= the timing of additional easing by the BoJ to November 2016, we revised d=wn our forecast of USD/JPY across forecast period: to 113 from 115 in 3Q16.

* =C2* We think there is a risk that the US=/.IPY breaks 110 before the BoJ eases their monetary policy again on Novemb=r 1st 2016.

* =C2* The important factors for our view a=e: the significant improvement in current account surplus, the higher fund=ng cost of JPY, Japanese authorities' preference and possible unwinds of large foreign asset investments by Japanese.=/u>

<JGB&g=;

* =C2* We continue to expect that the upsid= of JGB yields to be limited, regardless of the Boles inaction; th= most of domestic investors did not expect additional easing, additional easing expectations should remain given our forecast of lower U=D/JPY, and calendar-base JGB issuance will be reduced.

* =C2* We instead change the view about the=expected path of JGB yield curve; while we continue to expect flattening, =he move would be gradual.

<Equit=>

* =C2* Although about a half of the market =ad expected the BoJ to ease further, the initial reaction was surprisingly=tame. With the BoJ out of the way, the focus will likely be on relative values going forward. With the government reportedly=eyeing Y3 trillion supplementary budgets, the themes are likely cente=ed around supplementary-budget-related and earnings-related sectors and st=cks.

* =C2* Long-term prospect is less certain g=ven we expect JPY to appreciate going forward.

Click here <https://markets.jpmorgan.com/research/email/pufu8f0b/ws0zJ=aDs7aUCBn6gbooGA/GPS-1857160-0.pdf> for the full Note and disclosures.

## <=p>

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## <=p> (cont.)

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## <=p> (cont.)

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