April 26. BoJ’s Kuroda expects to hit 2% inflation target in FY 2015

–Once again US interest rates were little changed yesterday as auctions concluded with the 7 year.  Not much reaction to BoJ meeting; Kuroda expects to hit 2% inflation target beginning in fiscal year 2015 (April start).  USD/JPY currently lower on the day.  Perhaps it’s somewhat interesting that the BoJ expects inflation right in the same time period that a large calendar spread in euro$’s was bought…been a large buyer this week of EDM15/EDM16 for 46.5/47.5 (closed yesterday at 45.5).
–US news today includes Q1 US GDP expected 3.0% but nearly all news articles temper the expectations by mentioning that things are currently slowing.
–Next week’s FOMC is Wednesday.  Given that Bernanke announced that he is skipping Jackson Hole this year, I think big changes from current FOMC policy are quite unlikely.  As mentioned previously, it appears as though Bernanke would like to leave a “clean slate” for his successor.  If anything, voices counseling moderation regarding QE have increasingly engaged the debate. The risk to the market should probably lean toward less accommodation over the end of the year, which should give pause to those expecting ever tighter credit spreads.
–May treasury options expire today with TYM stapled to the 133 strike and bonds to 148.

Posted on April 26, 2013 at 5:53 am by alexmanzara · Permalink
In: Eurodollar Options

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