Bank Of Japan Reduces Bond Purchases

BoJ Reduces 5y-10y Bond Purchases In April

The Bank of Japan announced its April bond purchase plans; the 10y+ amount was as expected. The – bucket was reduced by JPY300 bn a month, which seems to have triggered selling in the JGB future. JBM1 is down 16c from close to 151.00. On Thursday there will be a 10y auction,  and I would think one needs to watch out for a long tail for the auction.


Do try to ignore what you are seeing on your screen as far as FX trading is concerned, month-end and especially quarter-end Housekeeping tends to be a messy affair. In fact, as mentioned below I went long for no other reason than hedge funds will need to buy more GBP relative to due to the month-end currency rebalancing signal vis a vis relative monthly stock market performances and already I’m up 65 pips 

And of course, has barely blinked as gold has been offered all week at every London auction. 


trading in a more narrow range the last two days compared to the volatility in the last week. The May contract expires today with the June contract trading at the same level, so no fuss there. Ahead of the OPEC+ group decision on production levels, a panel of OPEC+ technical experts cut demand estimates for 2021, signalling a more negative view of economic recovery. This is interpreted as bad news is good since it suggests a longer OPEC+ production extension a

That is just the world we live in. Without intervention,  at some level, be it OPEC, central banks or government handouts the entire house of cards collapses 

What started as a profit-taking correction triggered by a vaccine health scare has now moved into a whole out price level correction. The selloff is getting nudged along by cross-asset correlations associated with higher US yields, specifically the stronger US dollar  The market continues to price in tighter financial conditions despite the Feds effort to suggest the contrary.

Because of a very patchy reopening narrative with most countries outside the US, the UK and Israel, behind in their vaccination rollout protocols and even some countries in Europe back in lockdown, oil market sentiment continues catching down to the short term economic demand reality. 

But at the heart of it all, the rally was mainly on the back of OPEC+ production cuts—or rather, the fact that they agreed to hold production steady in April instead of ramping up production as the market had anticipated. So I suspect the oil market is experiencing a bit of reality check these days as the supercycle bulls might be giving way to the power of spare capacity as the thought of more barrels coming back continues to provide the medium-term supply headwind. 

And do watch out if the China credit cycle starts to rein in commodities; that is unlikely to be a pleasing wake up call either. 

ECB’s Lagarde Limited Credibility

Pretty much zero market impact from Bloomberg’s interview with ECB President Christine Lagarde despite the reporter asking all the right questions. It’s hard to imagine something similar when Fed Chair Jay Powell gives this type of interview. Of course, there is little focus on the ECB right now, but this also shows that Lagarde’s credibility with investors is limited due to the perception that she is driven mostly by the Governing Council, where we know views diverge substantially.

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