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JGBS: Cheapen After BoJ Hike To 0.50%

JGBS
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JGB futures have weakened to fresh session lows after the BoJ delivered the much anticipated 25bp rate hike to 0.50% with a vote of 8-1. Board member Nakamura voted against the rate hike. JBH5 is currently trading at 140.77, -16 compared to settlement levels versus the session low of 140.67.

  • The BoJ projects the fiscal year 2025 core CPI at 2.4%, up from the previous estimate of 1.9%. It also views price risks for fiscal 2025 as leaning to the upside. For fiscal year 2026, the BoJ forecasts core CPI at 2.0%, slightly higher than the prior projection of 1.9%. The forecast for fiscal year 2024 core CPI is now at 2.7%, compared to the earlier estimate of 2.5%.
  • The BoJ notes that Japan's real interest rate remains at a significantly low level and indicates it will continue raising interest rates if the economic outlook materializes as expected.
  • Cash JGBs are flat to 3bps cheaper across benchmarks. The benchmark 10-year yield is 2.7bp cheaper at 1.236% versus pre-lunch level of 1.216%.
  • Swap rates are 1-2bps higher after being little changed ahead of the decision. 
  • In contrast, cash US tsys are 1-3bps richer, with a steepening bias, in today’s Asia-Pac session after yesterday’s twist-steepener.
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JGB futures have weakened to fresh session lows after the BoJ delivered the much anticipated 25bp rate hike to 0.50% with a vote of 8-1. Board member Nakamura voted against the rate hike. JBH5 is currently trading at 140.77, -16 compared to settlement levels versus the session low of 140.67.

  • The BoJ projects the fiscal year 2025 core CPI at 2.4%, up from the previous estimate of 1.9%. It also views price risks for fiscal 2025 as leaning to the upside. For fiscal year 2026, the BoJ forecasts core CPI at 2.0%, slightly higher than the prior projection of 1.9%. The forecast for fiscal year 2024 core CPI is now at 2.7%, compared to the earlier estimate of 2.5%.
  • The BoJ notes that Japan's real interest rate remains at a significantly low level and indicates it will continue raising interest rates if the economic outlook materializes as expected.
  • Cash JGBs are flat to 3bps cheaper across benchmarks. The benchmark 10-year yield is 2.7bp cheaper at 1.236% versus pre-lunch level of 1.216%.
  • Swap rates are 1-2bps higher after being little changed ahead of the decision. 
  • In contrast, cash US tsys are 1-3bps richer, with a steepening bias, in today’s Asia-Pac session after yesterday’s twist-steepener.