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Will They Or Won’t They?


JGBs are set to start a fresh trading week with speculation re: the impending BoJ monetary policy decision somewhat rife. JGB futures were biased lower in the final overnight session of last week with core global FI on the defensive on the day, but failed to breach their Tokyo base, finishing -15.

  • While most expect the Bank to leave its monetary policy settings as they are, many concede there is at least some chance of a further tweak to the BoJ’s YCC settings, with speculation re: that matter intensifying as last week wore on, culminating in Friday’s breach of the upper limit placed on 10-Year JGB yields by the BoJ. It is worth noting that one or two sells-side analysts are of the view that the BoJ will scrap its YCC scheme altogether later this week.
  • Note that the BoJ bought a record amount of JGBs on Friday, with the Bank also taking the unorthodox step of pre-announcing unscheduled purchases for today after Friday’s Tokyo close. The Bank did not specify the size or tenors covered by the impending purchases, noting they will be based on prevailing market conditions.
  • When it comes to this week’s BoJ decision the Nikkei has flagged that “many in the central bank believe that it should take a wait-and-see approach on policy changes.”
  • Outside of the BoJ’s JGB purchases we will also see the latest PPI data on Monday, with any upside surprise having the potential to further fan the speculatory flames flagged above.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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