BOJ: Latest Press Reports Reaffirm June Hike/JGB Buying Discussions

The latest Nikkei sources piece reaffirms the idea that the BoJ will discuss an end to its quarterly reduction in bond buying at the upcoming monetary policy meeting, along with hiking its policy rate to 1.00%.

• Meanwhile former BoJ Executive Director, Hideo Hayakawa, tells Bloomberg that the Bank is likely to follow up a June hike with further tightening in October “at the earliest”. He suggests that “the BoJ is already falling behind the curve a little, so they need to catch up at some point.”
• ~23bp of tightening is priced for next week’s monetary policy decision, with 37.5bp of hikes priced through October (50% odds of another hike being delivered through that meeting).
• JGB futures add ~15 ticks on the Nikkei reports surrounding JGB purchases, with 10-Year JGB yields 1.0-1.5bp lower.
• Meanwhile, USD/JPY edges lower, presumably on the combination of the potential for swifter-than-expected follow up tightening beyond the upcoming meeting and the potential for less stress in the JGB market (per the two stories combined).