BOJ: "BOJ GOV UEDA: WILL TAKE SOME TIME TO JUDGE WHETHER 2% INFLATION IS [...]

0NU6 96.00/96.10cs, bought for half in 5k.

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EXECUTIVE SUMMARY

• The Riksbank is unanimously expected to hold the policy rate at 1.75% on Thursday. Focus will be on whether the policy statement reiterates the message from the June rate path, or makes an additional hawkish tweak in response to slightly higher-than-expected inflation outturns and a recovery in activity metrics.
• Given the August decision does not include an updated set of forecasts (only a concise Monetary Policy Update document), the Board may opt to note that risks to the June rate path are skewed to the upside, but refrain from making any quantitative assessments on the likelihood of a rate hike later this year.
• Such a stance could still disappoint market pricing though. At the time of writing, there are ~35bps of hikes priced through December 2026 and 83bps through December 2027. With the policy rate currently at the lower end of the Riksbank’s 1.5-3.0% nominal neutral rate estimate, a normalisation towards the middle of that range (i.e. 2.00-2.25%) makes sense in the context of an improving growth outlook and underlying inflation moving gradually back towards target. However, a more aggressive tightening response still seems at odds with current conditions.
• Analysts are unanimous in expecting rates to remain at 1.75% in August, but divided on when (or if) a hike will be delivered. 

Large Bobl Eurex Rolls goes through.

• OEAU6/Z6 was bought for -33 in ~42k.

But this was followed by some rolls trading at -34. The spread has traded in ~78k outright spreads.