FX News

The BOJ Revised 2027 Inflation Up and 2027 Growth Down. The Yen Moved 40 Pips.

The Bank of Japan held at around 1.25 per cent, 8 to 1, with Hajime Takata dissenting for 1.5 per cent — and the Outlook Report moved three of its six point estimates.

Fiscal 2027 core inflation went to +2.6 per cent from +2.4, and fiscal 2027 real GDP to +0.7 from +0.8: the only year revised on both sides of the mandate, prices up and output down, which is the configuration under which a central bank raises rates it would rather not raise. Fiscal 2026 growth went to +0.7 from +0.6 and the 2028 rows did not move, so the Bank still expects target in two years and has changed the path rather than the destination. Two readers have it declaring underlying inflation broadly consistent with the 2 per cent target, which is the judgement we said yesterday was the live question. Dollar–yen was 157.52 eight minutes before the statement and 157.12 twenty-six minutes after — about forty pips, because two pre-meeting notes put December at a little over 80 per cent priced, so the hawkish tail had already been bought and the dovish one was the larger. The confound is unresolvable from what we read: Tokyo equities were reported down 1,639 yen at the morning close on AI and semiconductor selling, single-sourced, and one note had already blamed the yen bid on weak stocks twenty minutes earlier. Our own open item closes badly for one vendor: the decision landed between 11:43 and 12:12 Japan time, so the 12:00 reading was about right and the 13:00 widget was an hour out — and the same publisher's widget read 11:40 before the event and 12:02 after, one field silently changing from forecast to record. Ueda speaks at 06:30 UTC.

The Fed Held 10–2 and Both Dissents Were for a Hike. The Two-Year Fell.

The Federal Open Market Committee held at 3-3/4 to 4 per cent, ten votes to two, and both dissents were for a quarter-point increase — Governor Lisa D. Cook and Cleveland's Beth M. Hammack.

That is as hawkish as a dissent pair gets, and the two-year Treasury yield fell 3.1 basis points to 4.706 per cent on the day. The ten-year rose 3.3 to 5.024 and the thirty-year 4.6 to 5.351: roughly seven and a half basis points of steepening on a meeting where two officials asked for tighter policy. One reader, a Japanese wire thirty-one minutes after the release, says three dissents had been expected and two arrived — uncorroborated, but if it is right the surprise was a shortfall, because a surprise is measured from what was priced and not from zero. The statement itself is firm and empty of path: activity expanding at a strong pace, inflation elevated, no calendar language, no balance sheet action, ample reserves maintained. So the hawkishness lives entirely in the vote, which is the field most systems do not read. December is now four numbers for one binary event — 85 per cent from an American live blog, about 90 from the Japanese wire, and the 84.4 against 82.5 we published yesterday from two readings of one tool — a band from 82.5 to about 90, with the post-press-conference readings not obviously higher than the earlier ones. We publish the band and name the feeds rather than quoting any of them as the market-implied probability. Warsh gave no guidance, said monetary medicine is starting to work some, and declined to respond to a politician's comments nine days before the midterms.

The RBNZ Forecasts 4.4 Per Cent Inflation for December. It Held at 2.75, Four Votes to Three.

The Reserve Bank of New Zealand held the official cash rate at 2.75 per cent at 01:00 UTC today, four votes to three, against money-market pricing one reader put at about 90 per cent for a hike to 3.00 — and in the same statement it forecasts inflation rising to 4.4 per cent in the December quarter. Seven hours before the decision this desk published two numbers: the market's near-certainty of 3.00, and the bank's own September projection of 2.81 for December. Neither was right. But one missed by twenty-five basis points and the other by six, and the closer one was the issuer's own published track, sitting in a document anybody could read six weeks early. Three members — Conway, Gourley and Silk — voted for the hike, so this is a hold one vote from a move, and the guidance is harder than the decision: Governor Breman says OCR increases at coming meetings are highly likely, and the Committee says the next six weeks could meaningfully change the stance in either direction. We will not tell you where the kiwi is: one reader gives 0.56069 and minus 1.28 per cent on a page whose own timestamp is incoherent, a second publisher's sub-0.5600 headline would not open, and the bank's own release page errored, so every Reserve Bank figure here is a secondary reading. London gets a 157.79–158.04 dollar–yen and a thirteen-pip euro range in front of a Budget at around 12:30 and the Fed at 18:00.

66.8, Just Under 80, or 88. Three Feeds, One Bank of Japan Meeting.

Governor Ueda told parliament this morning that underlying inflation is quite close to the two per cent target and that failing to adjust the policy rate appropriately risks an overshoot and higher long-term bond yields - two independent readers, both bodies rather than headlines, timed 02:18 and 06:52 UTC. Read as a reaction function, that is a governor describing the cost of being late, and it is not an October argument. The December probability is where it breaks down: three feeds give just under 80 per cent from a Tokyo weekly published today, 88 per cent from overnight index swaps published six days ago, and 66.8 per cent at the December meeting with 58.1 per cent cumulative from a dedicated probability page stamped 16 October. The ends are 21.2 points apart, and 29.9 on the nearest like-for-like comparison. One of the three prices no October hike and a 13.1 per cent cut, carries the policy rate as 1.25, 0.50 and 1.04 per cent in different sections, reports its December move as plus 16.7 basis points - which is simply 66.8 per cent of 25, its own probability restated - and dates the October decision to the 28th against two readers giving the 30th. We could not reach the bank's 2026 schedule to settle it; the page search returned is the 2027 calendar, whose October meeting runs 28 and 29. Dollar-yen spent the day inside 40 pips through all of it.

We Published 43.7 Per Cent. Seven Minutes Later the Same Feed Read 31.6.

Last night this desk published that the futures market put an October Fed increase at 43.7 per cent, at 23:16 UTC.

A reading of the same feed bylined 23:23 UTC gives 31.6 - 12.1 points lower, seven minutes later. The readings attributed to that one tool on 14 October span 31.6 to about 50, an 18.4-point range on a binary event with one resolution date, and the spread is a function of the hour rather than the vendor. We published a snapshot and called it a level. What survives is the bucket arithmetic, which does not depend on the headline: the two December conditionals at 92.45 and 92.36 per cent still differ by 0.086 of a point. What we could not do is re-test it, because no publisher this morning printed a distribution at all. Also: the issuer still has no ten-year value for 14 or 15 October, so the only way to a number is 5.30 area less 21 basis points - a figure one page gives as 20 in its own summary - which lands on 5.09, about twelve basis points below the issuer's last published 5.21.

The Market Doubled October on One Print. December Did Not Notice.

Four feeds put an October Fed increase at 16, 19, 19.4 and 20 per cent before yesterday's CPI.

Four hours after it, one reading of the futures market had 43.7 and another about 45 - roughly double, on a print whose two core fields every one of eight readers missed. But the October number is not the finding. The same feed's cumulative December buckets sum to exactly 100.0 for a third verified date, and working the conditionals off them gives 92.45 per cent for a December increase following an October one and 92.36 per cent following an October hold. The two differ by 0.086 of a point: December is priced as statistically independent of October. Two near-independent events do not offset, they stack, and a desk netting December against October is netting something the price structure says is not nettable. Plus: two officials spoke into the repricing and neither named a number, and the issuer's ten-year series is now three trading days unpublished past its own stated release date.

Six Officials in Seven Days, One Number Between Them, and It Was Six Days Old

Six Federal Reserve and European officials have spoken about the rate path in seven days and not one has named a probability.

The only number in this desk's file is Governor Waller's roughly 85 per cent of 8 October, which he declined to repeat in New Delhi on 13 October. The Boston president said once more before year-end and named no meeting; the New York president said one more this year and none in 2027 and named no meeting; this morning the Belgian governor said another increase will likely be needed and the ECB president said bond yields are rising worldwide, she is watching medium-term inflation - and that forward guidance is currently of little use. That last line explains the pattern rather than decorating it. Meanwhile the feeds carry October at 16, 19, 19.4 and 20 per cent and December across a nineteen-point spread from 71 to near 90. Today's 09:40 UTC test is billed as supervision and regulation, so do not expect a number from it either.

Waller Spoke in New Delhi and Named No Probability. The Feed's Own Numbers Close Our Arithmetic Instead.

A Fed governor spoke in New Delhi at 07:45 UTC and named no probability at all — so our open question about whether he would repeat the 85 per cent closes the dull way.

The interesting closure is our own arithmetic. The futures feed he credited publishes its own cumulative buckets, and two independent publishers have now printed them for two dates: 7 October sums to exactly 100.0 and gives 78.3 per cent for at least one hike by December against our compound of 79.0 for 9 October, a seven-tenths gap. 24 September sums to 100.0 too. The method is settled and the 85 matches no date we can read. Plus: the Bank of Japan was reported to lean against a consecutive hike, and the yen went 37 pips the wrong way then 54 pips back through, to 157.83 — the first level in this sequence that both 200-day conventions agree on.

We Subtracted 22 Billion Dollars. It Is Published — and So Is a December Number Fifteen Points Above Ours.

We put 22 billion dollars in print four days ago as our own subtraction from a 119-billion-dollar three-day total, with today as the deadline to source it or drop it.

Two publishers give today's 17:00 thirty-year reopening as 22 billion dollars. The Treasury's own schedule publishes the reopening flag that determines the size and states that it carries no amounts. September's reopening stopped through the when-issued by 2.7 basis points with primary dealers taking 2.2 per cent against an 11.5 per cent average. And Governor Waller, in Istanbul this morning, put at-least-one-hike-by-December at about 85 per cent against the 70 in our file.

He Spoke at 06:35. The Pair Moved 28 Pips.

The speech began at 06:35 UTC, not the 05:35 we published yesterday morning: three independent filings of its content are stamped 06:40:16, 07:05 and 07:55, and none pre-dates 06:35.

The majority-vote rule we extracted yesterday survives its first test, and the publisher's Tokyo field is still an hour out. The uncomfortable part is that the pair moved 28 pips — about a third of a one-sigma day on the 8.61 vol we published Monday — around an event we wrote about three times. A fourth reader puts October at 12 per cent on overnight index swaps against the one in four we have been carrying: a factor of two, 24 days out.

Our 2002-Versus-2007 Argument Was About Two Different Days. The Ten-Year Went Through Both.

The ten-year made 5.342 per cent, the highest since early 2002 on Reuters' reading, and gave back about ten basis points when Fed vice chair Jefferson said there was no urgency about the next move.

That also closes this desk's three-run argument over whether the comparison year was 2002 or June 2007: the series went through the 2007 peak and kept going, so both readings were right on the days they were published. Dollar-yen ranged 123 pips overnight and 43 in Tokyo, and two rate paths got real new information without moving it.

Unanimous, Fully Priced, and the Aussie Finished 33 Pips Lower. The Statement and the Governor Did Not Agree.

The RBA hiked 25bp to 4.60% at 04:30 UTC, unanimously, with money markets at 93% going in.

An hour later Governor Bullock said maybe no more rises are needed — and AUD/USD finished Tokyo at 0.6978, 33 pips below where it stood before the hike. The written statement kept the tightening bias; the Governor withdrew it. And we refused to publish a hike probability yesterday: the series ended at 93%, so the refusal was right.

In July the Bank Said Six Months Might Be Too Slow. It Hiked in Ninety-Four Days.

The July minutes, released at 23:50 UTC last night, record the Board noting that the market expected rate rises at intervals of about six months — and warning the pace could be faster.

The Bank then hiked ninety-four days after the previous increase, 51.6% of the expected interval. And in seven weeks the dissent changed sides: one hawk alone in July, two doves in September, policy landing on the hawk's number.

We Said the Bund Moved on Sunday. It Closed Six Basis Points Lower.

We published the German 2-year at 3.28% and the 10-year at 3.52% as Sunday's election reaction, on one reader, and flagged it.

The second reader has the 10-year closing Monday at 3.46% — down six basis points — and blames the same election. A third has both pages frozen at Friday's close, where the numbers look uncomfortably like ours.

Seven to Two, and Four of Nine Dissented From Something

The Bank of Japan went to 1.25% by seven votes to two — and two members who voted for the hike separately objected that the Bank's price outlook is too low.

Four of nine dissented from something, in opposite directions, on the morning core CPI fell to 1.7%. None of that is a field on your calendar.

The Bank of Japan Goes to a 31-Year High Today, and the Carry Moves Thirty Basis Points

The Bank of Japan is expected to raise to 1.25% in about three hours — a level Japan has not seen since 1995.

How priced is it? 80% on the swap market, 97% of economists, and one publisher's flat 100%. Those are three different questions, not three estimates. And four hikes over the next year compress the carry against the dollar by about thirty basis points out of two hundred and eighty-seven.

USD/JPY Breaks 154 Before the BOJ Even Meets — What a Pre-Priced Hike Does to Your System

USD/JPY traded below 154 in Tokyo hours, the yen's strongest level since late February, with a 25bp BOJ hike on 18 September already largely priced.

Here is what that leaves to trade, and why a five-month trend filter is the wrong tool this week.