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Rates Unchanged, Upside Inflation Risks, Growth Lower, Bond Purchases Remain

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JGB futures are exhibiting weakness, -16 compared to settlement levels, but are sitting higher than the morning’s range.

  • The BoJ kept its interest rates unchanged, which was widely expected. Focus largely rested on the forecast outlook, references to the weaker yen and planned bond purchases.
  • The bank said it would buy government bonds in line with its March decision but dropped a footnote saying it had purchased about 6 trillion yen per month in the past.
  • On the forecast side, for inflation the 2024 FY core CPI forecast was kept at 1.9%, but with upside risks. 2025 was nudged up to 1.9% (from 1.8% prior). The first 2026 forecast was at 2.1%.
  • On growth, the 2024 FY forecast was nudged down to 0.8% from 1.2% prior. 2025 was kept at 1.0%, while 2026 is also seen at 1.0%.
  • The cash curve bear-steepening has remained but has been pared. Yields are flat to 1bp higher versus 1-3bps higher at the lunch break. The benchmark 10-year yield is 1.5bps higher at 0.914% versus the fresh YTD yield high of 0933%, set this morning.
  • The swaps curve is holding a twist-steepener, pivoting at the 40s, with rates -5bps to +2bps. Swap spreads are tighter out to the 30-year.
  • The local market is closed on Monday.
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JGB futures are exhibiting weakness, -16 compared to settlement levels, but are sitting higher than the morning’s range.

  • The BoJ kept its interest rates unchanged, which was widely expected. Focus largely rested on the forecast outlook, references to the weaker yen and planned bond purchases.
  • The bank said it would buy government bonds in line with its March decision but dropped a footnote saying it had purchased about 6 trillion yen per month in the past.
  • On the forecast side, for inflation the 2024 FY core CPI forecast was kept at 1.9%, but with upside risks. 2025 was nudged up to 1.9% (from 1.8% prior). The first 2026 forecast was at 2.1%.
  • On growth, the 2024 FY forecast was nudged down to 0.8% from 1.2% prior. 2025 was kept at 1.0%, while 2026 is also seen at 1.0%.
  • The cash curve bear-steepening has remained but has been pared. Yields are flat to 1bp higher versus 1-3bps higher at the lunch break. The benchmark 10-year yield is 1.5bps higher at 0.914% versus the fresh YTD yield high of 0933%, set this morning.
  • The swaps curve is holding a twist-steepener, pivoting at the 40s, with rates -5bps to +2bps. Swap spreads are tighter out to the 30-year.
  • The local market is closed on Monday.