U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
RBA Set to Hike Rates Again Amid Inflation Surge and Global Uncertainty 
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge 
Goldman Sachs Raises ECB Rate Hike Forecast Amid Persistent Energy-Driven Inflation 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
Taiwan Central Bank Expected to Hold Interest Rates Steady Through 2027 
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Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
Stock Futures Dip as Investors Await Key Payrolls Data 
ANZ and Westpac Forecast Two RBA Rate Hikes in March and May 2026 
Bank of Japan Holds Rates Steady Amid Inflation Concerns and Yen Weakness 
China's Refining Industry Faces Major Shakeup Amid Challenges 
Hitoshi Suzuki, the member of the Bank of Japan’s policy board, pointed out over the weekend that the central bank could adjust its current yield curve control strategy as soon as inflation was moving towards its 2% target. This morning the comments of some analysts now point towards this meaning that the BoJ may be planning to start exiting from its expansionary monetary policy soon. Really? Anyone taking a look at inflation developments in Japan recently immediately realizes how pointless this comment is. The underlying price trend stands at only just above zero.
In view of this disappointing price trend, even the BoJ had to once again revise its inflation outlook to the downside recently so that if anything it has moved away further from a normalization of monetary policy again.
However, some now argue that the BoJ might tighten its monetary policy before inflation has reached its target. Of course, everything is possible. But in its forward guidance, the BoJ points out that it would stick to its expansionary monetary policy until inflation has even risen above its 2% target.
In its view, this is the only way it can finally overcome the long period of low inflation rates in Japan. It is doubtless that as a result, the BoJ is, therefore, furthest away from normalizing its monetary policy amongst all G10 central banks. Sorry to mention, dear JPY bulls! Courtesy: Commerzbank
With little new information at hand, we keep our trade recommendations unchanged. The dollar lost its upward momentum as select high profile drivers of support stalled. However, cyclical conditions are still strong in the US and USD positioning is modestly short ahead of the first FOMC in a year to possibly deliver higher “dots”. Thus, we encourage staying modestly long the dollar vs. CHF and JPY but shorts in near run.
Implied correlations between yen-crosses are rich for a benign post-Japanese election environment bereft of idiosyncratic yen risks; sell USDJPY vs. CHFJPY correlation swaps hedged with USDJPY FVAs.
