SWITZERLAND DATA: Productivity Only Marginally Positive In Q1

• The BOJ held the policy rate at 0.75%, as widely expected, while maintaining a tightening bias. The board vote was 6-3 in favour of holding rates at 0.75%, which compares to a 8-1 vote to hold rates steady at the March policy meeting. In this sense, today's hold can be seen as marginally hawkish, given more votes to hike the policy rate compared to the last meeting. Board members Nakagawa, Takata and Tamura were all in favour of taking the policy rate to 1.00%.
• In terms of forecast shifts, not surprisingly we saw inflation raised for both core CPI and core, ex energy. For the 2026 financial year the core CPI forecast was raised to 2.8% from 1.9% prior, for the ex-energy measure it was raised to 2.6% from 2.2%. The 2027 forecast was also nudged up to 2.3% for core (from 2.0%) and 2.6% (from 2.1%) for core, ex energy.
• The BoJ reiterated that the price trend will be in line with its goal from the second half of the 2026 financial year.
• On growth, the current GDP financial year forecast was cut to 0.5% from 1.0% prior. For the next financial year it was nudged down to 0.7% (0.8% was the prior forecast).
• Not surprisingly, the risks for the current financial year were skewed towards higher inflation and lower growth, given the Iran conflict. Pass through of higher oil prices to food prices and broader goods and services is a watch point. The BoJ noted medium to longer term inflation expectations had risen moderately.
• Financial conditions remain accommodative, which is still expected to support moderate growth.

The EFSF is likely to hold a syndication today while the Netherlands will hold a conventional auction and the EU will hold the non-competitive round for its auction. Italy and Germany will hold auctions later in the week. Yesterday, the EU and Belgium held auctions. We look for gross issuance of E27.5bln for the week, up from E13.6bln last week.

For the full document with a look ahead to issuance through the remainder of this week and next week click here.

• The EFSF has sent a mandate for a syndicated transaction for a new 7-year Sep-33 bond (ISIN: EU000A2SCAZ3). The transaction is expected to be launched and priced in the near future, subject to market conditions. This means a transaction today is likely. We look for a E3bln transaction size, in line with most 7-year EFSF issues over the past few years.
• The Netherlands will come to the market this morning, looking to sell E1.0-1.5bln of the 3.75% Jan-42 DSL (ISIN: NL0009446418) via a conventional auction.

The previously flagged risk-off price action seemingly stems from a tweet from a Pakistani reporter noting that "Contrary to reports in Indian press, Iran’s Foreign Minister is NOT returning to Pakistan following his Russia visit -- Indian press reports are fake news -- Iran’s negotiating team is currently in consultation mode and will return when there to Islamabad, soon, when they think there is headway in talks."