10-year JGB yield jumps following improvement in October household spending; Q3 GDP closely eyed

The Japanese 10-year government bond yield jumped on the last trading day of the week Friday following an improvement in the country’s household spending for the month of October, albeit surprising market participants who expected a rise compared to same period last year.

However, on a m/m basis, household spending remained above consensus estimates, thus offsetting the negative impact from the y/y figure. Investors will now be focussing on the country’s gross domestic product (GDP) for the third quarter of this year, scheduled to be released by end of this week for detailed direction in the debt market.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, jumped 6 basis points to 0.060 percent, the yield on the long-term 30-year note rose nearly 1-1/2 basis points to 0.800 percent and the yield on short-term 2-year surged 9 basis points to -0.140 percent by 05:40GMT.

Household spending decreased 0.3 percent in October from a year earlier, government data showed on Friday, confounding a median market forecast of a 1.4 percent rise and marking the second straight month of falls, compared to -1.6 percent in September.

Further, on a m/m basis, it climbed 1.8 percent, vs consensus estimates of 1.4 percent, compared to previous reading of -4.5 percent.

Separate data showed real wages slipped for a third straight month in October, adding to concerns a full-fledged recovery in consumer spending is still some way off.

Meanwhile, the Nikkei 225 index closed 0.85 percent higher at 21,684.31 by 05:45GMT, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at 46.53 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex