JGBs hop tracking global debt market rally as investors remain cautious on economic distress; eyes on February IP, retail sales data

The Japanese government bonds closed higher Thursday tracking a rally in the global debt market as investors mounted among investors that an economic slowdown is nearing, especially after late last week U.S. 3-month Treasury yield topped the 10-year counterpart, leading to a partial inversion of the yield curve, a necessary condition for a recession ahead.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, plunged over 2-1/2 basis points to -0.093 percent, the yield on the long-term 30-year traded slumped over 3-1/2 basis points to 0.505 percent and the yield on short-term 2-year suffered 13 basis points to trade at -0.176 percent by 06:10GMT.

President and Chief Executive of the Federal Reserve Bank of Kansas City Esther George opined that slower global growth is a headwind for the United States, but does not think the central bank is inhibiting growth. She advocated a “wait-and-see approach” on rates amid “notable” downside risks, OCBC Treasury Research reported.

Overnight, S&P500 closed weaker, weighed down by energy producers amid falling crude oil prices, while the UST bonds rallied with the 10-year yield falling to 2.37 percent (lowest since Dec 2017).

Adding to the dovish rhetoric was ECB’s Draghi who opined that an accommodative stance is still needed, as well as BNM and RBNZ’s turnaround yesterday to signal that the next move will likely be down, the report added.

Meanwhile, the Nikkei 225 index closed 1.69 percent lower to 21,018.00, while at 06:00GMT, the FxWirePro's Hourly JPY Strength Index remained highly bullish at 150.26 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex