JGBs gain at close as investors await May trade balance data, BoJ’s monetary policy meeting

The Japanese government bonds gained at close on Tuesday as investors wait to watch the country’s trade balance data for the month of May, scheduled to be released today by 23:50GMT and the Bank of Japan’s (BoJ) monetary policy meeting, due to be concluded on June 20, which shall provide further direction to the debt market.

At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 3 basis points to -0.127 percent, the yield on the long-term 30-year slightly edged 1 basis point lower to 0.361 percent and the yield on short-term 2-year remained flat at -0.196 percent.

The auction of JPY1.9 trillion ($17.55 billion) 5-year JGBs attracted bids 4.51 times the offer, slightly lower than bid-to-cover of 4.94 in the previous auction in May. The tail, or the gap between the lowest and average prices, was a tight 0.01, Reuters reported.

US stocks edged up slightly last night although the DXY was little changed as markets await the outcome of the FOMC this Wednesday. At this point, whilst the Fed may not go all the way to directly indicate an easing in 2019, it is believed that they may still want to keep their options open by dropping language such as “patience” and instead point to the need to closely monitor inflation and global economic developments, OCBC Treasury Research reported.

Meanwhile, the Nikkei 225 index closed -0.80 percent lower at 20,954.00, while at 06:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at 64.79 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex