MBS Day Ahead: Bank of Japan Did What Now? Bring on The Fed!

Posted To: MBS Commentary

Bond markets had two central bank announcements to endure today, and the first one is already out of the way, sort of... The Bank of Japan unleashed a policy announcement so complicated and nuanced that it seems markets have put the task of trading it on the back burner until after this afternoon's Fed announcement. So what's the big deal with the BOJ news? In a few nutshells, here's what the BOJ did: Set a target for 10yr yields (unprecedented). That target is "around zero percent" Kept short term rates unchanged abandoned its target for money creation, but at the same time said it will continue adding 80 trillion Yen every year In a complete contradiction to the previous statement, it said it would keep printing money until CPI exceeds 2% abandoned commitment to buy...(read more)

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