Market expectations ebb for additional BOJ easing - Nikkei

The Nikkei Asian Review published an article on Tuesday, suggesting that expectations of further BOJ easing have faded thanks to the central bank’s new policy framework of yield curve control and increased expectations of higher fiscal spending in Trump’s presidency.

The Nikkei report, “Overnight index swaps, where unsecured overnight call rates are exchanged for fixed interest rates over a certain period, are a leading indicator of what the markets expect the BOJ to do in the coming year.” 

On Monday, the implied average OIS for the next 12 months jumped 0.25 basis point from the previous session to minus 0.025%.

“The BOJ is receiving a tailwind from Trump's election win. He has promised to stimulate the American economy via infrastructure spending and tax cuts. This has lifted long-term U.S. Treasury yields, in turn softening the yen beyond 116 to the dollar at one point Monday,” the Japanese daily added.

A BOJ official, referring to a meeting slated for next week, said "This month's meeting will be held under the calmest conditions seen this year."