Rates Strategy Weekly

Mizuho Securities has revised its BOJ outlook to include a final 25bp rate hike in March 2026 to stabilize the yen, followed by a pause as inflation moderates. They maintain a bearish view on long-term yields, expecting them to trend lower after this terminal hike.

Key Takeaways

• 1.The Bank of Japan's January Summary of Opinions was significantly more hawkish than expected, increasing the likelihood of an early rate hike.
• 2.Mizuho has revised its forecast to include a 25bp rate hike in March 2026, primarily driven by persistent yen weakness and political tolerance for tightening.
• 3.Despite the near-term hike, the strategist expects a 'one and done' scenario where rates move lower later in 2026 as inflation falls below 2%.

Table of Contents

• BOJ releases hawkish Summary of Opinions for January MPM
• Revised rates outlook: Next hike likely to be "one and done"
• Relative value data
• RELATIVE VALUE SCORE TABLES
• REVISED RATES OUTLOOK: DESPITE HIGHER PROJECTIONS, WE STILL SEE RATES ULTIMATELY MOVING LOWER
• Bond market outlook
• Risk scenarios
• Investment strategy

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