Post-BoJ Rally Pared

JGB futures have pared post-BoJ decision gains to be dealing +4 compared to settlement levels.

• As largely expected, the BoJ delivered no changes in policy, forward guidance or its explicit easing bias. There have also been no signals regarding the termination of the Negative Interest Rate Policy (NIRP). The upper bound reference on long-term yields was also maintained at 1%.
• In terms of forecasts, FY24 Core CPI has been downwardly revised to 2.4% y/y from 2.8% but FY25 has been upwardly revised slightly to 1.8% from 1.7% previously. FY24 & FY25 Core Ex-Energy CPI forecasts were left unchanged at 1.9%.
• A more hawkish development would have been if the 2025 forecast was at or above 2%.
• Cash JGBs have maintained their twist-flattening, pivoting now at the 3s, but the rally at the long end has been pared. The 40-year yield is 3.7bps lower at 2.004% versus a low of 1.98%.
• The benchmark 10-year yield is 1.2bps lower at 0.646% versus a post-BoJ low of 0.635%.
• The swaps curve has bull-flattened, with rates flat to 3bps lower. Swap spreads are generally wider.
• Tomorrow, the local calendar sees Trade Balance and Jibun Bank PMIs (P) data, along with BoJ Rinban Operations covering 1-25-year JGBs.