JGBs lose ground post higher-than-expected July retail sales

The Japanese government bonds lost ground in early trading Wednesday after reading the country’s higher-than-expected retail sales for the month of July, released late Wednesday.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell slightly to 0.01 percent, the yield on long-term 30-year also remained tad 1 basis point lower at 0.83 percent and the yield on short-term 2-year hovered around -0.15 percent by 03:10 GMT.

Japan’s retail sales rose at an annualized 1.9 percent in July, following a revised 2.2 percent gain the previous month, the Ministry of Economy, Trade and Industry reported late Wednesday. The increase was well above the median estimate, which called for a gain of 1 percent.

Further, North Korea’s firing of a ballistic missile over Japan could increase pressure on Washington to consider shooting down future test launches, although there is no guarantee of success and U.S. officials are wary of a dangerous escalation with Pyongyang.

Japan also faces questions over the legality of shooting down missiles in its airspace but not aimed at Japan. Under legislation passed in 2015, Tokyo can exercise a limited right of collective self-defence, or militarily aiding an ally under attack, if it judges the threat to Japan as “existential”, Reuters reported.

Meanwhile, Japan’s Nikkei 225 traded 0.53 percent higher at 19,465.50 by 04:20GMT, while at 04:00GMT, the FxWirePro's Hourly Yen Strength Index remained highly bearish at -129.02 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest