- Despite the BoJ’s recent rate hikes, the global monetary policy condition is still expected to loosen as the BoJ still maintains its presence in the JGB market while lower inflation clears the path for European central banks to lower their policy rate.
- The market is growing sceptical about the Fed’s 75 bps FFR cut signal, fuelling the expectation of a widening policy rate gap that may drive up the demand for US Treasuries.
- The risk of foreign capital outflow due to the widening policy rate gap against the Fed could be more significant in the Asian market given the underlying regional problem.