23 January 2024
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No change expected from Bank of Japan today

By Khatija Haque

The focus today will be on the Bank of Japan’s monetary policy meeting. Markets expect the policy rate to remain unchanged at -0.1%, but will watch for indications from policy makers on the possible timing of policy normalization. While inflation in Japan remains above the 2% target (2.6% y/y in December 2023), it has slowed over the course of last year. Wage growth has so far lagged inflation, depressing real incomes, and price sensitive consumers may deter businesses from raising prices in line with the Bank of Japan’s inflation target. Nevertheless, most analysts expect the BoJ to start raising rates in Q2. 

The Conference Board’s US leading index declined -0.1% m/m in December. While the decline was smaller than the market had expected, the leading indicators for the economy fell for the 21st month in a row.

Today’s Economic Data and Events

19:00 Eurozone consumer confidence (Jan, prelim) forecast -14.3

19:00 US Richmond Fed manufacturing index (Jan) forecast -6

Fixed Income

  • PIF raised USD 5bn in three tranches of 5y, 10y and 20y senior unsecured notes on Monday. The total order books exceeded USD 27bn according to Bloomberg. Final pricing for a 5yr tranche was at Treasuries +115, a 10yr at +145 and a 30yr at +205.
  • US yields fell slightly on Monday with little in the way of macro data released and the Fed in a closed period ahead of next week’s FOMC meeting. The 2y Treasury yield was only fractionally lower on Monday at 4.389% while the 10y yield declined 0.4bp to 4.10%.
  • Benchmark 10y yields were lower across the board in Europe, with Bunds down -5.1bp to 2.29% and Gilts down -2.3bp to 3.9%.


  • The USD index rose modestly on Monday as EUR weakened -0.1% against the greenback. JPY rose 0.1% ahead of this morning’s BoJ meeting, snapping a five-day losing streak.
  • Commodity currencies were mixed with AUD weakening -0.15% against the USD while NZD and CAD appreciated 0.05% and 0.04% respectively.


  • The rally in US equities continued at the start of the week, with the Dow Jones closing above 38,000 for the first time, up 0.4% on the day. The S7P500 gained 0.2% while the Nasdaq 100 rose 0.1% yesterday. European markets also had a positive session with France’s CAC40 up 0.6%, Germany’s DAX up 0.8% and the UK’s FTSE100 up 0.8% on Monday.
  • Chinese authorities are considering measures to stabilize the stock market according to Bloomberg reports. The measures include creating a stabilization fund to deploy CNY 2tn (USD 278bn) in funds from state owned enterprises offshore as well as CNY 300bn in local funds. The Hang Seng index is up almost 3% this morning as of this writing, but is still almost 10% down year-to-date.
  • UAE equity markets closed fractionally lower on Monday, with the DFMGI down -0.01% and the ADXGI down -0.33%. Salik continued to rally following news last week that it would add two new toll gates in Dubai, and the stock was up another 2.3% yesterday. The Saudi Tadawul ASI rose 0.9%.


  • Both Brent and WTI prices rose yesterday, up 1.9% and 2.4% respectively after Ukraine reportedly attacked Russian energy facilities on the Baltic coast. Additional US and UK strikes against Houthis in Yemen overnight will likely add to the uncertainty in the market.
  • Oil production at Sharara, Libya’s largest field, has resumed after three weeks of interrupted output caused by protesters. Oil production in Libya last year was fairly stable at an average of about 1.1m b/d, up from 0.99m b/d in 2022.
  • Russia overtook Saudi Arabia as the largest source for China’s oil imports in 2023. Russian supplies of oil to China grew almost 25% y/y according to Bloomberg.


Written By

Khatija Haque Head of Research & Chief Economist

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