JGBs trade tad higher despite improvement in June trade balance; national core CPI seen rising to 0.8 pct y/y

The Japanese government bonds remained tad higher Thursday as investors had largely shrugged-off the improvement in the country’s trade balance data for the month of June, released late yesterday. Investors now expect to see a slight pick-up in the national core consumer price inflation data for the same period, scheduled to be released today by 23:30GMT, to 0.8 percent y/y, from prior 0.7 percent y/y.

The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, remained 1/2 basis point lower at 0.04 percent, the yield on the long-term 30-year traded tad down at 0.68 percent and the yield on short-term 2-year hovered around -0.12 percent by 05:25GMT.

Japan’s exports to the United States fell in June for the first time in 17 months amid worries about U.S. President Donald Trump’s protectionist trade policies, Reuters reported.

Japan’s overall exports rose 6.7 percent in June from the same period a year ago, less than the median estimate for a 7.0 percent annual increase expected by economists in a Reuters poll. Exports grew an annual 8.1 percent in May. Imports rose 2.5 percent in the year to June, versus the median estimate for a 7.0 percent increase.

The trade balance was a surplus of JPY721.4 billion (USD6.40 billion), versus the median estimate for a JPY534.2 billion surplus. Further, the country’s trade surplus with the United States may draw criticism as Trump’s administration raises tariffs to lower the U.S. trade deficit and combat what it says are unfair trade policies.

Meanwhile, the Nikkei 225 index traded flat at 22,797.00 at 05:30, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at 4.70 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex