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2024

2023

  • Daiwa's View

    Daiwa's View

    22 January 2024 455 KB PDF
    • Signposts for 2024—Expected BOJ Jan meeting highlights 
    • BOJ Jan Outlook Report forecast FY24 core CPI likely revised downward, but big move for core-core CPI unlikely
    • New messaging at BOJ Gov Ueda’s press conference? Wage hike effects, forward-looking statements, increased certainty for realizing 2% price stability target since last meeting? 
    • BOJ must not miss golden opportunity!
  • Politics Watch

    Politics Watch

    22 January 2024 320 KB PDF
    • LDP fundraising scandal could hamper break from deflation
    • Investigation into ruling LDP’s fundraising scandal has come to a close for now; ruling LDP avoids worst-case scenario, but summary indictment of Kishida faction’s former treasurer is noteworthy
    • PM Kishida focusing on overcoming deflation, especially wage hikes exceeding rising prices
    • Efforts to break from deflation could stall if Kishida held accountable as former head of punished faction, thus limiting his ability to push for higher wages
  • Daiwa's View

    Daiwa's View

    19 January 2024 444 KB PDF
    • Market anomalies related to US presidential elections
    • After presidential elections, we tend to see a rise in stock prices and the USD/JPY rate, and a decline in the Dollar Index
    • When former President Donald Trump won in 2016, we saw a rise in stock prices, the USD/JPY rate, and the Dollar Index
    • If former President Donald Trump were to win this time, the reaction may be similar to that in 2016, but US economic trends should be monitored carefully
  • Daiwa's View

    Daiwa's View

    15 January 2024 476 KB PDF
    • New development of lower volatility → lower bond yields ➢ Fed staff comments in minutes for Dec FOMC meeting suggest unusual uncertainty since pandemic may be diminishing
    • Lower volatility → lower yields possible this year
    • Could be painful development for JGB investors who were waiting for yields to rise on BOJ policy revisions
  • Daiwa's View

    Daiwa's View

    11 January 2024 415 KB PDF
    • Consensus on the Fed’s QT (Dec 2023)
    • MBS balance expected to continue decreasing, even after halt to reduction in UST balance
    • QT expected to slow in spring 2024
    • Consensus is optimistic for economic conditions, assuming ample liquidity remaining
  • Public Finance Watch

    Public Finance Watch

    10 January 2024 329 KB PDF
    • Noto earthquake to increase contingency reserve funds in FY24 budget bill, but no impact on calendar-based market issuance of JGBs
    • FY24 budget bill’s general contingency reserve fund increased to support areas hit by Noto Peninsula earthquake; new JGB issuance also increased
    • JGB issuance plan to be revised at same time, but calendar-based market issuance likely unchanged owing to use of front-loading issuance of refunding bonds
  • Daiwa's View

    Daiwa's View

    5 January 2024 521 KB PDF
    • Analysis of JGB term premiums
    • Expect increased interest in JGB term premiums if Japan transitions to “world with interest rates”
    • 10yr JGB yield rise above 0.9% last year linked to sharp UST term premium rise, but currently unsustainable
    • Immediate target is pre-QQE “0.5% risk-neutral yield + 0.5% term premium ≈ 1%”; see 0.4% + 0.4% ≈ 0.8% as realistic target for a dip-buying
  • Public Finance Watch

    Public Finance Watch

    4 January 2024 530 KB PDF
    • FY24 JGB issuance plan, draft budget, timing for issuing CT bonds
    • MOF plans to issue Y1.7tn in CT bonds with decisions on maturities/issuance timing expected around Mar; likely options are one issuance (Apr-Jun) or two (Apr-Jun + from Jul)
    • Calendar-based JGB market issuance plan cut by almost Y20tn; flowbased avg maturity has lengthened to about same level as before coronavirus
    • Draft budget supports public sector wage hikes; goal of returning spending to normal remains difficult due to many issues other than coronavirus; breaking from 30 years of deflation seen as essential