Rates Strategy Weekly

This report analyzes BoJ Governor Ueda's recent policy signals and discusses the implications of a proposed food consumption tax cut on the Japanese bond market. Mizuho maintains its baseline scenario of rate hikes in June and December 2026.

Key Takeaways

• 1.BoJ Governor Ueda's recent speech and subsequent media reports suggest a high likelihood of a rate hike at the June Monetary Policy Meeting.
• 2.Potential government plans to cut the consumption tax on food items without clear funding sources represent a negative factor for the Japanese bond market.
• 3.Mizuho projects interest rates to remain elevated, though the market's current terminal rate pricing of 2% is viewed as too high.

Table of Contents

• Ueda's speech and BOJ-related reports
• Analyzing reports on consumption tax cut
• 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
• RELATIVE VALUE SCORE TABLES
• Important Disclosure Information
• Analyst Certification
• Disclaimer