JGBs flat in silent trade ahead of January household spending, 30-year auction

The Japanese government bonds remained flat Tuesday ahead of the country’s household spending data for the month of January, scheduled to be released today by 23:00GMT. Also, Japan’s super-long 30-year auction, due to be held on March 7 at 03:35GMT will add further direction in the debt market.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad higher at 0.007 percent, the yield on the long-term 30-year traded flat at 0.640 percent while the yield on short-term 2-year slumped nearly 14 basis points to -0.138 percent by 07:15GMT.

Yesterday marked a positive session for most risk assets, but the market enthusiasm about an imminent US-China trade deal (beyond a “soybean solution” as dubbed by Lighthizer) has petered out overnight, with Wall Street closing lower and UST bonds gaining, with the 10-year bond yield retracing to 2.72 percent, OCBC Treasury Research reported.

Elsewhere, on the Brexit front, UK PM May is sending AG Cox back to Brussels today to negotiate legally binding changes to the Irish backstop ahead of her Parliament vote on 12 March.

With China’s National People’s Congress getting underway today, given market anticipation of a 3 percent point cut in the manufacturing value-add tax rate, Asian markets may need fresh catalysts for the next move higher beyond jawboning for the US-China trade deal, the report added.

Meanwhile, the Nikkei 225 index closed 0.53 percent lower at 21,705.50, while at 07:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at -9.78 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex