Nomura senses strong BOJ policy shift as rate hike expectations build
|Despite the Bank of Japan’s (BOJ) policymakers insisting on maintaining the monetary policy ultra-easy, Takenobu Nakashima, Chief Rates Strategist at Nomura Securities, said that markets could be in for a surprise rate hike announcement from the BOJ.
Key quotes
“Wariness continues to linger in markets about the BOJ doing some sort of policy tweak -- not just widening the band to allow for 10-year yields to move.”
“Speculation for a policy shift is particularly strong among foreign investors.”
“Traders likely remember that BOJ Governor Haruhiko Kuroda suddenly introduced a negative rate policy in 2016, despite having denied such a move was a possibility at the time.”
Meanwhile, the two-year forward overnight index swaps climbed to a high of 0.19% -- a gap of about 20 basis points above the current rate -- a sign of increased speculation that a shift in policy lies ahead, per Bloomberg.
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