Asia weighs on Treasury market as traders assess possible BOJ shift, China reopening

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It isn't likely only the Federal Reserve or European Central Bank weighing on the Treasury market on Monday, but also the Bank of Japan.

In one of 2022’s more unusual U.S. bond-trading sessions, it wasn’t only the Federal Reserve or European Central Bank weighing on the roughly $24 trillion Treasury market on Monday, but also concerns about the Bank of Japan.The BOJ, the last dovish major central bank left in the world, may be moving closer to a hawkish pivot, analysts said.

Taken together with China’s sudden reopening following a swift rollback of many COVID restrictions, the latest on the BOJ was having at least some influence on Treasurys trading, said Larry Milstein, senior managing director of government debt trading at R.W. Pressprich & Co. in New York. “We’ve already heard from the Fed, which is pushing back against what the market is pricing in,” while traders have absorbed European Central Bank President Christine Lagarde’s plans for more rate increases in 2023, the trader said.

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