- The yen rose for the first time in three months as anticipation that the Bank of Japan will soon end the world's last negative interest rate regime intensified, while stock and bond markets saw fluctuations.
- The 10-year Treasury yield increased by five basis points, but S&P 500 futures saw no movement. The 10-year note's interest rate increased by 12 basis points after Japanese bonds saw a significant sell-off and the yen gained 1.6% against the dollar.
- The action sent shockwaves through the global government rally and casts additional uncertainty on central banks' readiness to shift their focus to rate cuts. Interest-rate bets were shifted by traders in Japan in response to remarks made by BoJ Governor Ueda about more challenging policy ahead. At one point on Thursday, overnight-indexed swaps indicated a nearly 45% likelihood that the BoJ will cease its negative interest rate policy at this month's meeting.
- Additionally, traders cited the fact that markets are overdue for a break after recently rallying. US labour market data, such as today's unemployment claims and Friday's non-farm payrolls, were met with caution.
- BoE is to cut the bank rate to 5.00% in Q3 2024; 4.50% in Q4 (vs 4.75%, 4.50% in the Nov poll) - Poll.
