• Meanwhile in markets, with the conflict in Iran out of the limelight the question is: what will drive markets now? US Treasuries are trading sideways this morning as Brent crude holds near yesterday’s lows;

• Fortunately, we have this week’s central bank bonanza to keep us busy. Earlier this morning the Bank of Japan delivered exactly what was expected – hiking rates by 25 bps. The BOJ’s benchmark now stands at 1.00 percent – and while such a ‘low’ rate might make some presidents jealous it is actually Japan’s highest interest rate since 1995. The yen weakened a touch on the decision – with USDJPY trading at 160.28 at pixel time – though it remains above the week's lows. JGB yields ticked up 1–7 bps this morning, but across the curve yields remain lower than they were a week ago;

• The BOJ’s statement signals that further policy normalization lies ahead, but for clearer guidance we must wait for the press conference later this morning. Governor Ueda was unable to attend the meeting, leaving Deputy Governor Uchida to step into the hot seat. Ahead of the presser, BOJ-dated TONAR futures are close to fully pricing in another hike in 2026 – though at 21 bps they aren't quite there yet;

• Not everyone is on board with further normalization. The morning’s vote to hike came in at 7-1. Board member Asada – the first member appointed by a dovish Prime Minister Takaichi – dissented in favor of a hold, citing downside risks to economic growth;

• Shifting to the nuts and bolts of the decision, the Bank of Japan also announced it will stop tapering bond purchases. Instead, it will keep its purchases steady at around ¥2 trillion from April 2027 onwards;

• Moving down under, the Reserve Bank of Australia also announced its interest rate decision. After three consecutive hikes, the bank voted unanimously to hold rates steady. While the RBA stated that future hikes will continue if required, punters are less convinced. Cash rate futures now sit at just 13 bps of tightening by year-end, down from the 16 bps we clocked late last week;

• Shifting to broader markets, S&P 500 and Stoxx 50 futures are hovering near yesterday’s close, with the latter still within sight of its record. The broad dollar has strengthened marginally this morning. In commodities, Brent crude is trading at 82.71 at pixel time, while European natural gas prices hold near a one-month low of €42.8 per MWh;

• Looking ahead, it is set to be a light afternoon, with just a couple of ECB-speakers to break up the monotony. Tomorrow will be a much more action-packed day featuring US retail sales and UK CPI data, the Riksbank’s interest rate decision and the all-important FOMC meeting – where Fed Chair Warsh makes his debut.

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