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JGBS: Cheaper But Off Worst Levels After BOJ Decision

JGBS
BulletAPACFixed Income BulletsJapanMarkets

JGB futures remain weaker but well above morning lows after the BOJ decision,  -24 compared to the settlement levels.

  • The BOJ decided 8-to-1 to keep the unsecured overnight call loan rate at 0.25%, increasing chances of a January hike after ascertaining wage data and the outlook for the U.S. economy.
  • Market players are focused on how BOJ Governor Kazuo Ueda refers to the outlook for monetary policy and the U.S. economy following the rate cut by the Federal Reserve at a post-meeting press conference.
  • Today’s decision highlighted policymakers' reluctance to raise the policy rate.
  • OIS pricing for today’s meeting was flat versus late October’s MPM, reflecting only an 8% probability of a 25bp rate hike. This marked a notable softening from the 50:50 chance priced in earlier this month. The next monetary meeting will be held on Jan. 23-24.
  • Cash US tsys are flat to 2bps richer, with a steepening bias, in today’s Asia-Pac session after yesterday’s aggressive post-FOMC sell-off.
  • Cash JGBs are 1-2bps cheaper across benchmarks, with a flattening bias. The benchmark 10-year yield is 0.7bp higher at 1.089% after making a fresh cycle high of 1.1130% earlier today.
  • The swaps curve has bear-steepened, with rates flat to 5bps higher.
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JGB futures remain weaker but well above morning lows after the BOJ decision,  -24 compared to the settlement levels.

  • The BOJ decided 8-to-1 to keep the unsecured overnight call loan rate at 0.25%, increasing chances of a January hike after ascertaining wage data and the outlook for the U.S. economy.
  • Market players are focused on how BOJ Governor Kazuo Ueda refers to the outlook for monetary policy and the U.S. economy following the rate cut by the Federal Reserve at a post-meeting press conference.
  • Today’s decision highlighted policymakers' reluctance to raise the policy rate.
  • OIS pricing for today’s meeting was flat versus late October’s MPM, reflecting only an 8% probability of a 25bp rate hike. This marked a notable softening from the 50:50 chance priced in earlier this month. The next monetary meeting will be held on Jan. 23-24.
  • Cash US tsys are flat to 2bps richer, with a steepening bias, in today’s Asia-Pac session after yesterday’s aggressive post-FOMC sell-off.
  • Cash JGBs are 1-2bps cheaper across benchmarks, with a flattening bias. The benchmark 10-year yield is 0.7bp higher at 1.089% after making a fresh cycle high of 1.1130% earlier today.
  • The swaps curve has bear-steepened, with rates flat to 5bps higher.