Free Trial

Little Changed, Light Local Calendar, Focus On Friday’s BoJ Policy Decision

JGBS

In the Tokyo afternoon session, JGB futures are slightly weaker, -1 compared to the settlement levels, after today’s BoJ Rinban operations showed mixed results.

  • (MNI) At Friday's meeting, we expect the BoJ to maintain its target range for the uncollateralized overnight call rate at 0-0.1%. This aligns with the BoJ's consistent messaging since the March rate hike, which emphasised a data-dependent, "wait and see" approach. A consecutive rate hike at this juncture would likely convey a conflicting signal.
  • Looking ahead, we anticipate the BoJ to follow a modest, gradual hiking trajectory. A growing number of economists foresee the possibility of another rate hike in October, with July also emerging as a potential earlier timeframe. Factors such as the prospect of a weaker yen are cited as potential accelerators for this timeline. (See MNI BoJ Preview here)
  • Cash JGBs are dealing little changed. The benchmark 10-year yield is 0.3bp lower at 0.886%, just shy of the YTD high of 0.894%.
  • The swaps curve has twist-steepened, pivoting at the 20s, with rates -2bp to +1bp. Swap spreads are tighter out to the 10-year and wider beyond.
  • Tomorrow, the local calendar will see Weekly International Investment Flow, Leading & Coincident Indices and Dept Sales data. Tokyo CPI data is due on Friday.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.