BoJ: Focus on decision - Westpac

Robert Rennie, Research Analyst at Westpac, points out that we spent much of the last year questioning how long the BoJ would carry on adding to market confusion by maintaining a ‘redundant’ ‘about’ ¥80tn JGB outstanding holdings at the same time as a ‘vague’ ‘around zero’ 10yr JGB yield target. 

Key Quotes

“Given the BoJ last hit ¥80tn in October 2016, we feel fully vindicated by what feels like a ‘trial balloon’ on the part of the MPB to gauge potential market reaction.”

“Clearly the market reaction would suggest that now is not a good time to stoke bond bears, with a potential trade war in the offing and US bond yields appearing well contained/ curve flattening still in play.”

“As such, we stick with our ‘neutral’ near term; more positive bias medium term bias.”