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‘YCC elimination’25% by the end of fiscal year 2023, QUICK Fixed Income Market Research

THE NIKKEI via scoutAsia

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December 2, 2022 1 min read
‘YCC elimination’25% by the end of fiscal year 2023, QUICK Fixed Income Market Research

According to QUICK‘s monthly bond survey for November released on 28th, The percentage of respondents who indicated that the elimination of the longterm rate target “is” out of the short- and long-term interest rates operation (Yield Curve Control = YCC) by the end of fiscal year 2023 was 25%. The lifting of the Negative interest rate “is” also at 34%, and the observation that monetary policy will be drastically revised is gradually spreading among some market participants.

The BOJ is currently guiding the short-term interest rate to minus 0.1% and the long-term rate to around zero percent in the YCC. Although the long-term rate has a “plus or minus about 0.25%” fluctuation tolerance, it has exceeded 0.25% at times amid selling pressure on JGBs, mainly from overseas investors.

54% said they would like to increase the volatility of the long-term rate, and 27% said they “would” shorten the maturity of the 10-year bond, which is currently set at 10 years. 42% “have” raised the long-term rate target. With Governor Haruhiko Kuroda‘s term set to expire in April 2023, bond market participants expected the next BOJ governor to be current Deputy Governor Masayoshi Amamiya (71%) and former Deputy Governor Hiroshi Nakaso (28%).

The Fed (Federal Reserve) will begin lowering interest rates most frequently in the October-December 2023 period at 39%, followed by the first half of 2024 at 36%.

The survey was conducted from 21st to 24th among 181 fixed income MARKET SOURCES, including securities firms and life insurance companies, and received responses from 119 respondents.

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The English translations provided through this service are the result of automatic and mechanical translation of contents written in Japanese and created by Nikkei or licensed by a third party, by an automatic translation system provided by a third party after certain processing of the contents by Nikkei. Nikkei disclaims all warranties, express or implied, related to the English translations, including any warranty of accuracy, reliability, validity and fitness for a particular purpose. Users shall use this service with the full understanding that it employs an automatic translation system that automatically and mechanically recognizes and analyzes information and outputs the results.