JGBS: Cash Bonds Little Changed As BoJ Delivers Expected Decision

JGB futures have nudged higher, +3 compared to settlement levels, after the BoJ policy decision.

• At its October 30-31 meeting, the BoJ Policy Board unanimously (9-0) decided to keep the policy rate at 0.25%, as expected, amid heightened economic uncertainty and concerns over government stability following the ruling coalition’s weakest electoral outcome since 2009.
• The decision aligned with expectations from all but one of the 53 analysts surveyed by Bloomberg, as well as with market pricing.
• Notably, the BoJ reaffirmed its commitment to raise rates if inflation targets are met, a pledge that was absent in the September meeting.
• The BoJ has trimmed its inflation outlook for next fiscal year, from 2.1% in July to 1.9% today. The following year is also projected to be 1.9%.
• Officials see next year’s GDP slightly stronger at 1.1% vs a 1% prior estimate. Core consumer prices are also seen slightly higher this year at 2% vs a 1.9% prior estimate.
• Cash US tsys are 1-2bps richer in today’s Asia-Pac session after yesterday’s bear-flattener. Focus now turns to today’s weekly claims, personal income/spending and MNI’s Chicago PMI data.
• Cash JGBs and swaps are little changed across benchmarks.
• Tomorrow, the local calendar will see Jibun Bank PMI Mfg.