Most Analysts Look For No Change Today, Citi Are The Exception

Most analysts (42/43 covered by the BBG survey) expect no change in Bank of Japan policy settings later today (albeit with varying degrees of conviction).

• Citi are the exception, with their base case looking for an outright abandonment of Yield Curve Control.
• They point to "the distortion of the yield curve and the need to fundamentally address it, as well as the relatively lower impact of abolishing YCC under Kuroda vs the next governor."
• Citi sees 10-Year JGB yields moving to 1.00% on that surprise, with 7s10s or 5s10s steepeners also having potential as the end of YCC may be accompanied by a strengthening of QE and NIRP.
• On the FX side, Citi suggest that the abandonment of YCC has not been fully priced in, pointing to a likely leg lower in USD/JPY should we see this happen. Their global macro strategy team suggests that Y125 or lower is by “no means far-fetched” in this instance. Meanwhile, their FX strategist suggests that Y122-123 may be a good zone to establish short-term long positions, if USD/JPY gets there.
• They also note that more dovish policy tweaks will likely pull USD/JPY higher in the short-term, although fundamentals will continue to point to medium-term JPY strength. In this instance, their FX strategist thinks that Y130-135 would be a good zone to establish core USD/JPY short positions.