FxWirePro: Daily Commodity Tracker - 21st March, 2022 
The Australian government bonds traded narrowly mixed Tuesday as investors remained focused on the Federal Reserve and Bank of Japan’s monetary policy decisions scheduled to be released on Wednesday.
Also, traders did not react to the hawkish RBA September meeting minutes in which it sounded more comfortable after the August rate cut.
The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell ½ basis point to 2.177 percent, the yield on long-term 15-year note dipped 1 basis point to 2.559 percent and the yield on short-term 2-year jumped more than 2 basis points to 1.655 percent at 05:10 GMT.
The Reserve Bank of Australia released its meeting minutes, which imply that the central bank is in a wait-and-see mode to measure the effect of the May and August rate cuts on the Australian economy, according to ANZ.
The meeting minutes suggested that the central bank’s board normally considers that the Australia’s housing market conditions have softened, even though the RBA let go of the comment regarding the risks in the housing sector have waned. The minutes showed that the board also discussed the accuracy of lower housing turnover numbers and the forthcoming significant rise in apartment supply.
The Bank of Japan will hold its two-day monetary policy meeting on 20-21 September, announcing its decision on Wednesday, 21 September is a close call. But, we foresee that the BoJ's 9-member policy board is likely to cut rates on excess reserves and expand its monetary base as stagnant growth and continued risk of deflation will weigh on BoJ Governor Kuroda’s decision.
According to recent Reuters poll, 60 percent of economists see the Bank of Japan easing in September 21; 40 percent see them stay unchanged. Pollsters are split on possible policy action and over 50 percent said the BoJ will adopt more flexible wording on inflation targeting.
Various articles published yesterday pointed to the higher probability that the Japanese central bank will lower its key policy rate by about 10-20 basis points. According to Nikkei daily paper and Reuters, the BoJ will cut its interest rate deeper into negative territory.
Although other news articles, including another one from Bloomberg, affirms that there are a variety of different opinions on the board and Governor Haruhiko Kuroda and his delegates reportedly prefer a rate move to expanding quantitative easing, which is thought to be reaching its limit. Therefore, this backs our expectation that the marginal deposit rate will be trimmed next Wednesday.
Moreover, the United States Federal Reserve in its meeting scheduled on September 20-21 and it is widely expected to leave its interest rates on hold, despite concerns that the strength of the world’s largest economy warrants a rise in borrowing costs. The September FOMC statement as a potential rude awakening for markets who have come to interpret 'data dependence' to mean everything has to be perfect for the FOMC to act.
Given the continued support from labour markets and gradual improvement in pricing measures, coupled with a closing window ahead of the November elections, September sets itself up as quite possibly the best time to act (particularly given that supportive data is not something that can be a guarantee come the December meeting).
“Rates markets were mostly steady overnight, though the US market fell late in the day, taking US curves higher and steeper. Funding rates continue to rise,” said ANZ in a research note.
Meanwhile, the benchmark Australia's S&P/ASX 200 index traded 0.23 percent higher to 5,275.5 by 05:10 GMT.
