JGBs close higher despite better-than-expected improvement in August trade balance; BoJ meeting eyed

The Japanese government bonds gained during close of Asian trading session Wednesday despite a better-than-expected improvement in the country’s trade balance for the month of August, albeit still in deficit.

Investors will now eye the Bank of Japan’s (BoJ) monetary policy meeting, scheduled to be held on September 19 for further direction in the debt market.

At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, plunged 30 basis points to -0.182 percent, the yield on the long-term 30-year suffered 2 basis points to 0.344 percent and the yield on short-term 2-year also slumped 24 basis points to -0.264 percent.

The Bank of Japan (BoJ) remains under pressure to ease monetary policy as: inflation remains far from its goal; its major peers are easing; and its current policy framework lacks efficacy, according to a recent report from ANZ Research.

In an interview with the Nikkei newspaper on September 5, Kuroda said that “we're maintaining momentum toward the price stability target” and that “domestic demand is relatively firm”. These comments are not particularly dovish.

In the same interview, Kuroda said that he was thinking long and hard about policy options and considering a range of possibilities. It’s thus possible the BoJ is undertaking a comprehensive review and hasn’t settled on a suit of measures. It’s clear a number of elements to its current framework are not working, the report added.

Meanwhile, the Nikkei 225 index closed tad -0.18 percent down at 21,960.71.