Rates Strategy Weekly

Mizuho anticipates a likely BOJ rate hike in June 2026 despite mixed signals from Governor Ueda. The report also highlights risks from fiscal uncertainty linked to proposed consumption tax cuts.

Key Takeaways

• 1.Despite some ambiguity in Governor Ueda's recent speech, a BOJ rate hike at the June MPM remains the base-case scenario.
• 2.Government proposals to cut the consumption tax on food to 1% without clear funding sources present fiscal risks to the bond market.
• 3.The terminal rate for Japan is expected to be lower than the current market pricing of 2%, with yields likely to turn lower from 2027.

Table of Contents

• Rates Strategy Weekly "Ueda's speech and BOJ-related reports"
• DEVELOPMENTS THIS WEEK AND IMPLICATIONS FOR RATES OUTLOOK
• SHORT-TERM OUTLOOK (ONE WEEK – ONE MONTH)
• MEDIUM-TERM OUTLOOK (SEVERAL MONTHS – ONE YEAR)
• Risk scenarios
• BOJ bond purchases in May (outstanding JGB holdings)
• Yen rates relative value and investment strategies
• INVESTMENT STRATEGIES
• RELATIVE VALUE SCORE TABLES
• Important Disclosure Information
• Analyst Certification
• Disclaimer