JGBs jump on higher demand at 10-year auction; investors shrug-off 25-year low unemployment rate

The Japanese government bonds jumped on the last trading day of the week Friday, following higher demand at the country’s 10-year auction and as investors have shrugged-off the fall in the unemployment rate for the month of January.

Japan’s unemployment rate hit a 25-year low in January and job availability stayed at a two-decade high, government data showed on Friday, offering policymakers hope a strengthening economic recovery will nudge firms into raising wages.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1-1/2 basis points to 0.04 percent, the yield on the long-term 30-year note also declined 1-1/2  basis points to 0.74 percent and the yield on short-term 2-year dipped 1/2 basis point to -0.16 percent by 04:30 GMT.

Japan’s seasonally adjusted unemployment rate fell to 2.4 percent in January, down from 2.7 percent in December and lower than a median market forecast of 2.7 percent, data from the Internal Affairs ministry showed Friday.

Separate data showed core consumer inflation in Tokyo, a leading indicator of nationwide price trends, accelerated to 0.9 percent in February from 0.7 percent in the previous month.

While inflation remains distant from the Bank of Japan’s 2 percent target, Friday’s batch of data underscore the central bank’s view that brightening economic prospects and a tight job market will prompt firms to push up prices.

Meanwhile, the Nikkei 225 index traded 2.28 percent lower at 21,230.00 by 04:35 GMT, while at 04:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at 28.93 (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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