Morgan Stanley Fixed-BoJ Watch MacroEquity Strategy Farewell, NIRP and YCC as...-107124291

MMarch19,202403:18PMGMTMorganStanleyMUFGSecuritiesCo.,Ltd.+IdeaBoJWatch&Macro/EquityStrategyJapanTakeshiYamaguchi+8136836-5404+8136836-5407Farewell,NIRPandYCCasChiefJapanEconomist+8136836-8428Expected:MarchMPMReviewTakeshi.Yamaguchi@morganstanleymufg.com+8136836-8923andMarketImplications+8136836-8925MasayukiInui+8136836-8926TheBoJhasdecidedtoremoveNIRP,YCC,equityETFpurchases,andotherunconventionalpoliciesasweexpected.WediscussEconomist+656834-8172ourBoJoutlookafterGov.Ueda'spressconferenceandmarketMasayuki.Inui@morganstanleymufg.com+656834-6597implicationsonrates,FX,andequities.KoichiSugisakiKeyTakeawaysStrategistWemaintainourexistingcallthattheBoJwillraisetheshort-termpolicyrateKoichi.Sugisaki@morganstanleymufg.comagainfrom0.1%to0.25%inJuly2024.WeexpectJGBtooutperformOIS,andthecurvetobeunderflatteningpressure.MakotoFurukawaEasymonetaryconditionswouldbesupportiveforJPYcarryinvestors.MeaningfuldeclineinUSD/JPYisunlikelyunlessmarketspriceinUShardlanding.QuantitativeStrategistWereiterateouroverweightstanceonJapanequitiesversusAsia&EM,withaMakoto.Furukawa@morganstanleymufg.combasecasetargetof2,800(+2%)andbullcaseof3,100(+13%)forTOPIX.Favorex-deflationplaysforthelongerterm;namesheavilyownedbytheBoJUkyoHaraguchi,CFAmayalsoreceiveattentionwithsuspensionofETFpurchases.QuantitativeStrategistUkyo.Haraguchi@morganstanle...