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Bank of Japan Cuts Benchmark Rate
10/05/2010
The Bank of Japan cut the benchmark interest rate to between 0 and 0.1% and set up a 5T yen ($60B) fund to buy government bonds and other assets. Fed Chairman Bernanke also said that more asset purchases by the Fed would "ease financial conditions". ADP is scheduled for release tomorrow (consensus is +20K) and Nonfarm payrolls is set for release on Friday, no change expected. Right now, the futures market is pricing in an 86% chance that the Fed keeps rates between 0% and 0.25% through January 26th, 2011. Currently, the Ten Year yield is at 2.46% (2.49% yesterday) and the 2-10 yield spread is at 205bps, flattening 3bps since yesterday morning.
