MNI China Daily Summary: Monday, May 13

MNI BRIEF: Beijing Reveals 2024 Bond Issuance Plan

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MNI: PBOC Sets Yuan Parity Higher At 7.1030 Mon; -4.18% Y/Y

MNI UK Labour Market Preview - May 2024 Release

EZ/UK Bond Supply Calendar: EU, IT Syndis; NE, UK, DE Due Tuesday

EZ/UK T-Bill Calendar: Spain, Finland Auction on Tuesday

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

MNI: Growth Drag From Net Zero Carbon Goal Can Be Offset-OECD

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Futures Pop Higher On BoJ Policy Decision

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JGB futures continue to exhibit weakness, -16 compared to settlement levels, as the initial strengthening observed during early afternoon trading following the BoJ Policy Decision has moderated. While the BoJ maintained the overnight call rate between 0% and 0.1%, it omitted references to previous bond purchases of Y6tn/month. The rates decision was supported unanimously by the BoJ Board, with a vote of 9-0. Other key parts of the statement include:

  • Core CPI ex-energy is forecast to be unchanged from the previous at 1.9% y/y in FY2024. FY2025 Core CPI forecast is nudged 0.1pp higher than the previous to 1.9% y/y, while FY2026 Core CPI is seen at 2.1% y/y.
  • FY2024 GDP growth forecast is lowered to 0.8% y/y versus 1.2% previously. FY2025 & FY2026 GDP growth is forecast at 1.0% y/y.
  • BoJ stated that it is necessary to watch FX and its impact on inflation. Nevertheless, easy financial conditions are set to continue for now.
  • Inflation risks are skewed to the upside in 2024 but balanced thereafter. Risks to economic activity are generally seen as balanced.
  • The cash curve bear-steepening has remained but has been pared. Yields 1-2bps higher versus 1-3bps higher at the lunch break. The benchmark 10-year yield is 1.5bps higher at 0.914% versus the fresh YTD yield high of 0933%, set this morning.
  • The swaps curve is holding a twist-steepened, pivoting at the 40s, with rates -5bps to +1bps. Swap spreads are tighter out to the 30-year.
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JGB futures continue to exhibit weakness, -16 compared to settlement levels, as the initial strengthening observed during early afternoon trading following the BoJ Policy Decision has moderated. While the BoJ maintained the overnight call rate between 0% and 0.1%, it omitted references to previous bond purchases of Y6tn/month. The rates decision was supported unanimously by the BoJ Board, with a vote of 9-0. Other key parts of the statement include:

  • Core CPI ex-energy is forecast to be unchanged from the previous at 1.9% y/y in FY2024. FY2025 Core CPI forecast is nudged 0.1pp higher than the previous to 1.9% y/y, while FY2026 Core CPI is seen at 2.1% y/y.
  • FY2024 GDP growth forecast is lowered to 0.8% y/y versus 1.2% previously. FY2025 & FY2026 GDP growth is forecast at 1.0% y/y.
  • BoJ stated that it is necessary to watch FX and its impact on inflation. Nevertheless, easy financial conditions are set to continue for now.
  • Inflation risks are skewed to the upside in 2024 but balanced thereafter. Risks to economic activity are generally seen as balanced.
  • The cash curve bear-steepening has remained but has been pared. Yields 1-2bps higher versus 1-3bps higher at the lunch break. The benchmark 10-year yield is 1.5bps higher at 0.914% versus the fresh YTD yield high of 0933%, set this morning.
  • The swaps curve is holding a twist-steepened, pivoting at the 40s, with rates -5bps to +1bps. Swap spreads are tighter out to the 30-year.