Morning wrap (16.06.2026)

Central Banks: BOJ Hikes Rates but Softens the Message Through JGB Purchases

• The Bank of Japan raised its policy rate to 1.0%, the highest level since 1995. The decision was widely expected and forms part of the gradual normalization of monetary policy.

• The BOJ also highlighted upside inflation risks, indicating that CPI could rise clearly above its 2% target. Despite the rate hike, the yen saw little reaction, with USDJPY remaining above the 160 level.

• At the same time, the Bank of Japan announced that it will halt the process of further reducing Japanese government bond purchases from April 2027, maintaining monthly purchases at around ¥2 trillion. This adds a more dovish element to an otherwise hawkish rate decision.

Equities: JP225 Recovers Losses After BOJ Decision

• The JP225 (Nikkei 225) initially moved lower following the Bank of Japan’s announcement but later recovered its losses. Investors took the rate hike in stride, as it had been widely telegraphed in advance.

• The market is now focusing on whether the BOJ will proceed with another round of policy tightening as early as July. Sentiment was also supported by optimism surrounding progress in U.S.–Iran negotiations.

Central Banks: RBA Holds Rates and Shifts Into Wait-and-See Mode

• The Reserve Bank of Australia left its cash rate unchanged at 4.35%, in line with market expectations, following three rate hikes earlier this year. The decision was unanimous.

• The RBA emphasized that inflation remains too high but wants to assess the impact of previous tightening measures and the effects of disruptions in the oil market. The reaction in AUDUSD was minimal, making the decision largely market-neutral.

• Australia’s central bank also warned that global oil supply disruptions will take time to resolve. Higher fuel prices are expected to gradually feed through into the prices of other goods and services.

• At the same time, some of the more hawkish language present in the May statement was softened. This suggests that the RBA will likely remain in wait-and-see mode unless inflation accelerates significantly again.

Commodities: Goldman Sachs Cuts Brent Oil Forecasts

• Goldman Sachs lowered its Q4 2026 Brent oil price forecast to $80 per barrel from $90, while also reducing its average 2027 forecast to $75 per barrel.

• The revision reflects expectations that oil exports from the Persian Gulf will normalize by the end of July, one month earlier than previously assumed. This marks the bank’s second forecast downgrade within a week and reinforces the view that the geopolitical risk premium in the oil market is gradually fading.

• Nevertheless, even if a lasting agreement regarding the Strait of Hormuz is reached, oil prices could remain elevated for an extended period. Global inventories may have declined by 1–1.5 billion barrels, while marine shipping insurance costs remain well above normal levels.

Economy: China Shows Resilient Industry but Weak Domestic Demand

• China’s industrial production increased by 4.5% y/y in May, exceeding market expectations. At the same time, retail sales fell 0.6% y/y, marking the first annual decline since the pandemic.

• Fixed asset investment data also deteriorated noticeably. The figures suggest that export-related sectors and AI-linked industries remain resilient, while domestic demand continues to weaken.

• New home prices in China declined slightly faster in May than in the previous month. Major cities are showing early signs of stabilization, but the overall property sector remains fragile.

Precious Metals: Barclays Maintains Bullish Gold Outlook

• Barclays views the recent 20–25% correction in gold prices as a positioning reset rather than a change in the long-term trend. The bank maintained its 2026 gold price forecast at $4,791 per ounce and its 2027 forecast at $4,900 per ounce.

• According to Barclays analysts, gold continues to be supported by inflation risks, political uncertainty, and ongoing reserve diversification by central banks. A weaker U.S. dollar and lower bond yields following the de-escalation of tensions surrounding Iran could provide additional support for gold prices.