BOJ: MNI BoJ Preview - January 2025: Almost Certain To Hike
Jan-23 01:02
EXECUTIVE SUMMARY
- The Bank of Japan (BoJ) will announce its latest monetary policy decision this Friday, with expectations that it will move further along its policy normalisation path. Both market consensus and our analysis suggest a 25bps rate hike as the most likely outcome.
- The BoJ raised rates twice in 2024, first in March and again in July. However, it has maintained a hold since then, largely due to market volatility, including significant yen swings after the July hike. Political uncertainty has also played a role.
- Bloomberg consensus indicates that 31 analysts expect a 25bps hike, one predicts 10bps, and 13 expect a hold. Markets are pricing in a 94% chance of a quarter-point increase.
- Looking ahead, the BoJ is expected to maintain a cautious path, with 25bps hikes every six months.
- In the January Outlook Report, we expect the BoJ to maintain its economic growth forecast but slightly raise its inflation outlook.
- Full preview here:
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BONDS: NZGBS: Little Changed, NZ-US 10Y Diff Tightest Since Late 2020
Dec-24 00:59
NZGBs were slightly mixed, with benchmark yields 1bp lower to 1bp higher. Early weakness following the negative lead in from US tsys was reversed, but trading was subdued ahead of a holiday-shortened trading week.
- The NZ-US 10-year yield differential is at -11bps, the lowest level since late 2020.
- Swap rates are 1-2bps higher, with the 2s10s curve steeper.
- RBNZ-dated OIS pricing is showing 54bps of easing for February, with a cumulative 123bps by November 2025.
- Trading will resume on the 27th of December.
BOJ: MNI BoJ Review- Dec 2024: Uncertainty On Next Hike Timing
Dec-24 00:49
- The BoJ left rates on hold at the December meeting, which was expected by the economic consensus and what was priced by markets.
- The central bank highlighted high uncertainties around the outlook, along with gradual inflation trends, as justification for holding rates steady. BoJ Governor Ueda struck a dovish tone at the press conference, signalling no rush to adjust policy further.
- Watch points for the BoJ are wage trends in 2025 and the US economic and policy outlook.
- There was one dissent to the BOJ's decision, with board member Tamura in favour of a 25bps hike at the policy meeting.
- See this link:
CHINA: Crackdown on Bond Market Underway?
Dec-24 00:41
- A report in China’s 21st Century Business Herald suggests a heavy focus from the PBOC on bond market activity will result in the first batch of finesse being announced imminently with CNY10 m fines to be levied.
- Activities uncovered include disruption of market prices, artificial transferring the benefits from trades, not reporting trading activities and inappropriate internal oversight of bond market activities.
- It is known that on December 18 the PBOC summonsed firms to discuss what the Central Bank’s minimum requirements are when it comes to bond market trading.
- These minimum requirements focus on adequately assessing interest rate risk, activities supported by appropriate research and conducting all transactions in accordance with the law.
- Earlier in the week when the news of the meeting broke, bond yields moved higher yet since that time, they have again continued to fall.
- Today’s news article has again weighed heavy on markets and for the first time in many weeks, the 10YR yield has moved significantly higher, up +7bps to 1.78%
