JGBS: Bear-Steepener, BoJ Gov Ueda Reiterates Policy Stance
Apr-14 03:34
After the Tokyo lunch break, JGB futures are stronger, +22 compared to the settlement levels, sitting in near the middle of today’s range.
- BoJ Governor Ueda reiterated his stance that he won’t have any preconceptions over the conduct of monetary policy after uncertainties have risen due to US tariff measures. The central bank will take appropriate policy steps by carefully examining the economy and inflation, Ueda said in response to questions in parliament. (per BBG)
- Cash US tsys are 2-4bps richer, with a steepening bias, in today's Asia-Pac session after Friday's heavy session. The big news over the weekend was President Trump's exemptions on smartphones, computers, and other electronics, though this has been downplayed over the weekend as a procedural step. They will be looking at the whole electronic supply chain.
- Cash JGBs are 1-8bps cheaper across benchmarks, with a steepener curve. The benchmark 20-year yield is 3.7bps higher at 2.365% ahead of tomorrow's supply.
- The swap curve has twist-steepened, with rates are 2bps lower to 2bps higher. Swap spreads are mixed.
- The local calendar will see Industrial Production and Capacity Utilization data later.
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
Mar-14 21:28
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Mar-14 21:25
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
Mar-14 21:17
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
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