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STIR: BOJ Dated OIS Nudge Firmer Across Meetings After Gov Ueda’s Comments

STIR
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BOJ-dated OIS pricing continues to hold firmer across meetings versus levels prevailing ahead of the BOJ’s October 30-31 meeting. 

  • According to an interview with the Nikkei published on Saturday, BOJ Governor Kazuo Ueda said further yen weakening with inflation above 2% might prompt the BOJ to take countermeasures. Ueda made no comment as to the timing of the next rate hike and warned of major uncertainties around the U.S. economy.
  • “As far as wages are concerned, I would like to see what kind of momentum the fiscal 2025 spring wage offensive creates,” he added
  • Currently, OIS pricing sits 6–20bps firmer across meetings versus pre-BOJ MPM (Oct), with September 2025 leading the gains.
  • For the upcoming December 18-19 meeting, pricing has firmed by 11bps since late October, reflecting a 57% probability of a 25bp rate hike. Pricing for this meeting has been influenced by recent remarks from BoJ Governor Ueda, who described the meeting as “live.”.
  • According to a Bloomberg survey, just over half of economists expect the BoJ's next rate hike to occur in December.
  • Market expectations currently indicate: a 57% probability of a 25bp hike in December; a cumulative 82% chance by January; and a full 25bp increase is not fully priced in until May 2025 (+32bps).

 

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BOJ-dated OIS pricing continues to hold firmer across meetings versus levels prevailing ahead of the BOJ’s October 30-31 meeting. 

  • According to an interview with the Nikkei published on Saturday, BOJ Governor Kazuo Ueda said further yen weakening with inflation above 2% might prompt the BOJ to take countermeasures. Ueda made no comment as to the timing of the next rate hike and warned of major uncertainties around the U.S. economy.
  • “As far as wages are concerned, I would like to see what kind of momentum the fiscal 2025 spring wage offensive creates,” he added
  • Currently, OIS pricing sits 6–20bps firmer across meetings versus pre-BOJ MPM (Oct), with September 2025 leading the gains.
  • For the upcoming December 18-19 meeting, pricing has firmed by 11bps since late October, reflecting a 57% probability of a 25bp rate hike. Pricing for this meeting has been influenced by recent remarks from BoJ Governor Ueda, who described the meeting as “live.”.
  • According to a Bloomberg survey, just over half of economists expect the BoJ's next rate hike to occur in December.
  • Market expectations currently indicate: a 57% probability of a 25bp hike in December; a cumulative 82% chance by January; and a full 25bp increase is not fully priced in until May 2025 (+32bps).

 

Keep reading...Show less