Fixed Income Commentary

Post-NIRP outlook for repo rates and changing trading motives

  • By Keisuke Tsuruta (Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.)
  • Feb 06, 2024
  • BOJ Japan Fixed Income
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Post-NIRP outlook for repo rates and changing trading motives

Key points
  • Repo rates depend on BoJ current account structure as well as relative money market rates and JGB supply/demand

 

  • Move to two-tiered reserve structure would most likely leave repo rates trading slightly below TONA (0% - 0.1%)

 

  • Focus on changing trading motives for regional banks and life insurers as well as for larger participants such as securities companies, megabanks, and investment trusts

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