BOJ: Press Conference Concluded, Few Fresh Signals To Digest
Sep-19 08:00
The BOJ’s press conference has concluded. There weren’t many new monetary policy signals from Ueda. USDJPY was paring post-decision losses into and at the start of the press conference, but traded in a very contained range through the majority of Ueda’s remarks.
- USDJPY is currently -0.05% today at 147.91, after troughing at 147.20 immediately after the policy decision (driven by the hawkish vote split). Initial support remains at 145.49 (Sep 17 low at a pivot support). On the topside, yesterday’s high at 148.27 is untested.
- Ueda re-iterated that the BOJ retains a hiking bias. Future increases will be contingent on the economic outlook being realised, and as such no timeframe-specific guidance was provided.
- At the current juncture, the BOJ has not observed a clear impact from US tariffs on capex, wage and job trends in Japan. However, there are still downside risks to the economy, and the BOJ will be closely watching US Christmas demand trends via Japanese shipping data.
- Ueda tried to steer clear of comments around the Japanese political situation, but did note that BOJ policy would be impacted by the choice of PM and their proposed policies.
- A lot of the headline flow was devoted to the BOJ’s decision to start selling ETFs. Ueda noted that the plan has the flexibility to stop if needed, and that it was difficult to provide clear guidance on the move given the potential market impact.
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SWAPS: German Long End Spreads Underperform Ahead Of Supply
Aug-20 07:55
Long end underperformance in German swap spreads & ASWs this morning, ahead of the impending 20- & 30-Year supply, while the recovery from lows in wider Bunds provides support for the rest of the swap spread term structure.
- Zooming out, Commerzbank note that the cheapening theme “in Bund swap spreads continues. Spreads have been moving in line with outright yields over the past days and are now back at levels seen before Liberation Day. This tallies with the notion that de-dollarisation flows remain absent, bringing German fiscal concerns back into the driving seat. While a near-term correction also seems possible here if the equity sell-off continues, we stick to our view of further swap spread cheapening at the long-end over the coming months”.
EQUITY OPTIONS: Couple of Estoxx Put Spreads
Aug-20 07:52
- SX5E (21st Nov) 4650/4600ps, bought for 2 in 6.25k.
- SX5E (21st Nov) 4350/4300ps, bought for 1 in 12.5k.
SEK: EURSEK Pares Early Rise Following Non-commital Riksbank Decision
Aug-20 07:47
EURSEK has pared the modest increase seen into the policy decision, now up 0.13% today at 11.1880 (vs a session high of 11.2015). There’s also little net change in rates at the front of the FRA curve.
- Overall, the August decision keeps a September cut on the table, but does not signal an urgent need to ease policy at that meeting. The recent inflation rise is deemed as temporary, but still requires “vigilance”, while the Board is still cautiously optimistic about an economic recovery.
- There is plenty of data still due ahead of the September 23 decision, including August inflation and final Q2 GDP.
- Focus turns to the tone of the Governor’s press conference at 1000BST/1100CET.
- First Deputy Governor Breman will also give a presentation on the latest rate decision tomorrow, before the full August minutes are released next Tuesday.
