JGBs gain ahead of BoJ’s monetary policy meeting

The Japanese government bonds gained Tuesday as investors wait to watch the Bank of Japan’s (BoJ) two-day monetary policy decision, scheduled to be unveiled on July 20.

The benchmark 10-year bond yield, which moves inversely to its price, fell 1 basis point to 0.07 percent, the long-term 30-year bond yields slipped 1/2 basis point to 0.86 percent and the yield on the short-term 2-year note hovered around -0.10 percent by 06:30 GMT.

The BoJ is likely to be wary about ongoing subdued inflation. As such, no change in policy guidance is expected from the BoJ on July 20. Indeed, with inflation still a long way from its target, there remains little prospect that the BoJ will soften its easing bias anytime soon, despite less dovish (or more hawkish) tones by the ECB, the BoE and the Bank of Canada.

The BoJ board will update its growth and inflation projections in its Outlook for Economic Activity and Prices. Notably, this will be the last meeting for the BoJ hawks Kiuchi and Sato.

Meanwhile, Japan’s Nikkei 225 closed 0.59 percent lower at 19,999.00, while at 06:00GMT and the FxWirePro's Hourly Yen Strength Index remained neutral at 48.56 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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