Mizuho Securities
February 2, 2026
Rates Strategy Weekly: Changing Balance of Risks to Monetary Policy
Weekly UpdateRates Govt BondsFXMacro Economic IndicatorsFinancials
Mizuho analyzes the increasing likelihood of an early Bank of Japan rate hike in March or April 2026 intended to stabilize the yen, despite a baseline forecast of no further hikes due to cooling inflation.
Key Takeaways
- 1.The risk of the BOJ implementing an early rate hike in March or April specifically to address yen weakness has risen to a 20-30% probability.
- 2.The base-case scenario remains that there will be no further BOJ rate hikes as inflation is expected to fall below 2% in the second half of 2026.
- 3.US Treasury Secretary Scott Bessent may support BOJ tightening based on a belief that it would curb Japanese long-term yields and prevent spillovers into US rates.
Table of Contents
- (1) Changing balance of risks to monetary policy
- (2) Relative value data
- (3) Bond market outlook
- Risk scenarios
- Investment strategy
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Authors
Noriatsu Tanji
Securities
10y JGBUSDJPY20y JGB Asset SwapOvernight Call Rate
Themes
BOJ Monetary Policy RiskCurrency InterventionUS-Japan Yield Spillover
Regions
Asia PacificNorth AmericaJapanUnited States
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