Futures Richer Ahead Of BoJ Policy Decision

In post-Tokyo trade, JGB futures are richer, closing +9 compared to settlement levels, after US tsys opened the week with a subdued data-light NY session. The Conference Board Leading Economic Index, which fell by less than expected in December (-0.1% m/m, -0.3% est. and -0.5% prior), was the sole release.

• The US market’s main focus this week is the estimate of Q4 GDP released on Thursday, followed by PCE Deflators on Friday.
• Today the BoJ will deliver its Policy Decision. Our analysis aligns with the prevailing consensus, anticipating the BoJ to continue normalising its policy in 2024, though such adjustments are not anticipated at today's meeting. The delay in exiting the Negative Interest Rate Policy (NIRP) is grounded in several considerations: an evaluation of the impact of the earthquake, conclusion of the shunto wage negotiations, no incentive to surprise the market and the need to transition from an explicit easing bias to a tightening bias. (See MNI’s BoJ Preview here)
• Bloomberg reported that the BoJ is set to revise its price outlook through fiscal 2025 when it wraps up its policy meeting today, according to Nikkei reports without saying where it got the information. (See link)