Attention Bank of Japan Policy Meeting decision, additional easing or? Hold steady!? "Key points and event schedule for April 27"

Due to the impact of the coronavirus, a state of emergency has been declared, and schools and businesses are refraining from activities; days are continuing unlike usual.

Naturally, today would be the start of Golden Week (GW); for early companies, today might be the day they dive into GW.

Companies are already refraining under the state of emergency, so even after GW begins, there may not be major changes. However, the Tokyo market is likely to become a thinly traded market as GW approaches.

From today onward, caution is needed for GW and month-end factors.

◎ Today's Points of Attention

1) Bank of Japan Monetary Policy Meeting

Today, the Bank of Japan will announce policy with its schedule moved up to a one-day event.

Because the meeting has been advanced to one day and because further easing is expected this time, the announcement time is anticipated to be somewhat late, perhaps after 12:00 or close to 13:00.

What to watch is the content of the additional easing. It is forecast that the annual purchase target of government bonds, set at around 80 trillion yen, will be expanded without limit, and that the buying scope might be broadened to include government bonds and ETFs, as well as corporate bonds and CP (commercial paper).

However, the effect of the anticipated additional easing is likely to be limited.

As for the 80 trillion yen purchase, even last year, the unused purchase quota was made unlimited, but it ended up not being fully utilized.

Moreover, even if the scope is expanded to corporate bonds and CP, there may not be enough corporate bonds or CP in the market.

As a result, it could end up just as a show-off of “we did additional easing.”

Conversely, if no additional easing is announced and the policy remains unchanged, the yen could face upward pressure.

We will pay attention to today's announcement content and the press conference.

2) Crude Oil Prices

Crude oil prices are expected to remain volatile.

Although an output cut agreement was reached, the amount agreed upon was too small, causing oil prices to swing and market confusion.

They say discussions will resume on May 10, but will markets be willing to wait until then, or could prices fall again to single-digit levels?

Additionally, Saudi Arabia is expected to front-load production cuts; attention is on whether producing nations may not be able to restrain themselves from mentioning further cuts as oil prices fall.

3) Coronavirus

Restrictions on going out are being considered to be eased in Europe and the Americas.

If restrictions are lifted or eased, it could ease anxiety and support stock prices.

However, in Japan, infections are expanding, and the lifting of the state of emergency during GW seems unlikely; postponement of the emergency declaration is expected.

Regarding Japanese stock prices, the overlap of GW with the postponement of the state of emergency may keep upward momentum restrained.

Pay close attention to measures and policies against the coronavirus in the US, Europe, and Japan.

◎ Today's Event Schedule

April 27 (Monday)

Around 12:00 JPYBank of Japan Monetary Policy Meeting and Statement

15:30 JPYKuroda, BOJ Governor, Press Conference

20:00 MXN Unemployment Rate

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