BOJ: MNI BOJ Review - September 2023
Executive Summary
- On September 21-22, the Bank of Japan (BOJ) conducted its Monetary Policy Meeting (MPM), and as widely anticipated, it unanimously opted to maintain its current policy stance. This decision encompassed its recently introduced more flexible framework for yield curve control (YCC), the 1.0% yield for its fixed-rate purchase operations, and its large-scale bond purchases designed to shape the yield curve appropriately.
- The forward guidance provided by the BOJ remained unaltered, retaining its strongly accommodative stance. The central bank reaffirmed its commitment to take additional easing measures if necessary.
- Furthermore, the BOJ's assessment of the economy and prices remained unchanged, aligning with the upward revisions made in the previous Outlook Report.
- During the press conference, Governor Ueda emphasised that the path to achieving the stable 2% inflation target remains distant. He clarified his prior remarks in the Yomiuri Shimbun interview, explaining that his comments about the possibility of removing the negative interest rate policy (NIRP) were motivated by a desire not to constrain future policy decisions.
- Full review here: BoJ Review - September 2023
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US TSYS: Slight Richening In Early Asia-Pac Dealing
TYU3 is currently trading at 109-23+, +03 from NY closing levels.
- US tsys are sitting near Asia-Pac session highs, with benchmark yields flat to 2bp richer. The curve has steepened.
- There has been no news of significance so far in the session.
CNH: USD/CNH Tracks Tight Ranges, CNH Liquidity Remains Tight
USD/CNH sits close to opening levels in recent dealings, last around 7.2930. Dips to session lows near 7.2870 were supported, while offers remain above 7.2950 at this stage. Onshore equities opened weaker, but have clawed back losses. Positive momentum is still difficult to come by though. HK shares are faring better, the HSI +1.2% firmer at this stage, and tracking close to session highs.
- Tighter liquidity remains evident in the CNH space, the 1 month implied yield back to 4.57%. This is below recent highs above 5% but still well above recent norms. The 3 month is around 3.62%, also well above recent averages.
AUSSIE BONDS: Richer, At Sydney Session Highs, Light Calendar, Tracking Tsys
ACGBs (YM +3.0 & XM +2.5) are richer and near Sydney session highs. Without domestic catalysts, local participants appear to have been on US tsys and headlines watch. US tsys are sitting at Asia-Pac session highs, with benchmark yields 1-3bp richer. There has been no news of significance so far in the session. The curve has steepened.
- Cash ACGBs are 3-4bp richer, with the AU-US 10-year yield differential -1bp at -8bp.
- Swap rates are 2-3bp lower, with EFPs slightly wider.
- The bills strip has bull flattened, with pricing flat to +4.
- RBA-dated OIS pricing is flat to 2bp softer across meetings. A 5% chance of a 25bp hike in September is priced, with terminal rate expectations at 4.20%.
- Bloomberg reports that Australia’s bonds open higher on concern over China’s stuttering growth outlook, with the Asian nation’s press saying Beijing will soon need a “whatever-it-takes” policy declaration. (See link)
- Speech by RBA Deputy Governor Michele Bullock, “Climate Change and Central Banks” is due at 0840 BST / 1740 AEST.
