The Japanese government bonds traded nearly flat Monday, succumbing to thin trading activity as investor’s awaited Q1 GDP figure on Wednesday. Moreover, the super-long bond strengthened after 30-year bonds auction.
The yield on the benchmark 10-year bonds, which moves inversely to its price stood unchanged at -0.117 percent, yield on super long 30-year bonds fell 1-1/2 basis point to 0.285 percent and the yield on short-term 2-year bonds remained steady at -0.246 percent by 06:40 GMT.
Japan sold 71.2 billion of 30-year bonds record low yield at an average yield 0.3140 percent and high yield of 0.3200 percent. The average yield at the May sale was 0.319 percent. In April it was 0.388 percent and in March it was a comparatively lofty 0.765 percent.
Markets will remain keen to focus on Japan’s first quarter final GDP data, which is expected to grow by 1.9 percent annualised in the first quarter, from previous 1.7 percent in the last quarter of 2015. Apart from this, Japan’s tax hike is still a major talking point. The hike from 8 percent to 10 percent was scheduled to take place by April 2016, but now it’s expected to happen by the end of 2019.
In addition, the Federal Reserve Chair Janet Yellen said that if incoming data are consistent with labour market conditions strengthening and inflation making progress toward our 2 percent objective, further gradual increases in the federal funds rate are likely to be appropriate and most conducive to meeting and maintaining those objectives. Referring to the weaker than expected May employment report, Yellen noted that she sees good reasons to expect that the positive forces supporting employment growth and higher inflation will continue to outweigh the negative ones.
Yesterday, Japanese Chief Cabinet Sectary Suga said that the government is watching foreign exchange movements closely and will take action when necessary. He further added that sudden moves in the currency are undesirable. Moreover, Japan MOF's Asakawa said that he is always watching to see if speculative and excessive moves are occurring in the foreign exchange market. No objection to G7/G20 stance against competitive FX devaluation and excess forex volatility and disorderly moves hurt the economy, he added.
The JGBs have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Bank of Japan's target. Today, crude oil prices continue to hover at $50 mark. The International benchmark Brent futures fell 0.02 percent to $50.53 and West Texas Intermediate (WTI) rose 0.04 percent to $49.71 by 06:40 GMT.
Meanwhile, the benchmark Nikkei 225 index closed up +0.58 percent at 16,675.45, and the broader Topix index also closed higher 0.63 percent to 1,340.77 points.
The material has been provided by InstaForex Company – www.instaforex.com