The Bank of Japan is expected to hold rates steady amid rising global uncertainty. Short interest across Japanese indices has declined steadily in 2025, reflecting improving sentiment. Technology, consumer discretionary, and industrial sectors dominate the highest short interest names within TOPIX and Nikkei as the market adjusts to policy expectations.

The Bank of Japan is expected to keep its benchmark rate at 0.5%, potentially signaling a pause in policy normalization due to US tariffs and global uncertainty.

The BOJ is likely to make clear that the economic outlook is uncertain, and analysts expect the next rate hike to be in Oct., with overnight index swaps signaling a 70% chance of a rate hike by the end of 2025.

Year-to-date, Short interest across the TOPIX (TPX Index) has fallen to 4.6% from 5.1% of float (blue line) with the Nikkei 225 (NKY Index) down to 3.8% from 4.4% float (green line)

The SI upticks in both Indices at the end of March are skewed by div season, but the trend since the new year has been shorts unwinding positioning.

Top 20 TOPIX members in terms of Short Interest % Float (minimum $100mm notional short):

Information Technology, Consumer Discretionary, and Industrials make up 75% of the Top 20, with 5 names in each sector.

Top 10 NKY members in terms of Short Interest % Float:

Info Tech tops all sectors in terms of SI % Float across all JP listed equities at 6.83%.

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