JGBS: Richer After BoJ Lowers GDP & CPI Forecasts For FY25 & 26
May-01 03:42
JGB futures are sharply higher and at session highs, +45 compared to settlement levels, after the BoJ left the policy rate unchanged at 0.5%, as widely expected, and flagged downside risk to the economy in FY25 and 26.
- However, the bank maintained its stance of gradually raising the interest rate if underlying CPI inflation converges toward the bank’s 2% price target as projected as real interest rates remain at low levels.
- The policymakers will carefully monitor how the economy and inflation, hit by U.S. trade policies and volatile financial markets, have been evolving to examine the degree of downside risk to the economy for the time being.
- The BoJ lowered its median forecasts for economic growth in fiscal 2025 and 2026 to 0.5% and 0.7%, down from 1.1% and 1.0% projected in January, due to the growing impact of U.S. trade policies on Japan’s economy.
- The central bank also cut its core consumer price index forecasts, projecting 2.2% inflation this fiscal year and 1.7% in fiscal 2026, down from 2.4% and 2.0%.
- Cash JGBs are 1-6bps richer on the day across benchmarks, with 3- to 5-year zone leading. The benchmark 10-year yield is 3.6bps lower at 1.282% versus the cycle high of 1.596%.
- Swap rates are 2-3bps lower.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
AUSSIE BONDS: Slightly Richer, RBA Leaves Cash Rate Unchanged
Apr-01 03:42
ACGBs (YM +1.0 & XM +1.5) sit slightly stronger after the RBA decision to leave the cash unchanged at 4.10%. According to the accompanying statement:
- Inflation has significantly declined since 2022, aligning with forecasts, but the Board remains cautious.
- Domestic demand is recovering, though some sectors struggle to pass on costs. Labour market conditions remain tight despite easing wage pressures. Economic uncertainty persists, with risks to growth, inflation, and global trade.
- The Board prioritises sustainably returning inflation to target and will adjust policy as needed. Future decisions will be guided by economic data, global developments, and financial market trends to ensure long-term price stability and full employment.
- Cash US tsys are slightly richer in today's Asia-Pac session.
- Cash ACGBs are 1bp richer to 2bps cheaper with the AU-US 10-year yield differential at +20bps.
- Swap rates are 1bp lower.
- The bills strip is flat across contracts.
- Tomorrow, the local calendar will see Building Approvals and a speech from RBA Assistant Governor Chris Kent, who oversees financial markets, at the KangaNews Debt Capital Market Summit.
- The AOFM plans to sell A$800mn of the 3.75% 21 May 2034 bond tomorrow and A$600mn of the 1.00% 21 November 2031 bond on Friday.
RBA: A$ Slightly Higher Po t RBA, Rates Little Changed
Apr-01 03:36
The RBA left the cash rate unchanged as expected. The central bank remains cautious around the outlook, highlighting tariff uncertainties.
- The A$ is slightly higher post the decision, we did get to 0.6265, but sit slightly lower now, last near 0.6255/60. This is around 0.20% firmer for the session. The better regional equity tone is helping, with HK markets up over 1% (the earlier Caixin PMI helping).
- For rates we have seen little net change post the decision.
RBA SAYS IT WILL RELY ON DATA, RISK ASSESSMENTS
Apr-01 03:36
- RBA SAYS IT WILL RELY ON DATA, RISK ASSESSMENTS
