JGBs nearly flat as market remains silent on festive mood

The Japanese government bonds traded nearly flat Wednesday as investors remain sidelined in any big deal ahead of the Christmas and New Year holidays. We foresee that the bond prices will keep drifting between small gains and losses in quiet trading session.

The benchmark 10-year bond yield, which moves inversely to its price, hovered around 0.06 percent, the long-term 30-year bond yield also dipped 1/2 basis point to 0.66 percent and the yield on short-term 2-year note remained steady at -0.18 percent by 06:30 GMT.

At the monetary policy decision released Tuesday, the majority of the policy board members of the Bank of Japan (BoJ) decided to keep its benchmark interest rate unchanged at record low of -0.10 percent. The BoJ in its policy statement noted that it will purchase Japanese government bonds so that 10-year JGB yields will remain at around zero percent.

Additionally, with regard to the amount of JGBs to be purchased, the Bank will conduct purchases at more or less the current pace -- an annual pace of increase in the amount outstanding of its JGB holdings of about 80 trillion yen -- aiming to achieve the target level of the long-term interest rate specified by the guideline.

Lastly, investors will remain keen to focus on the next week's National consumer inflation for November, Tokyo’s consumer inflation and the unemployment rate for the same month.

Meanwhile, the benchmark Nikkei 225 ended 0.26 percent lower at 19,444.49. While at 06:00 GMT, the FxWirePro's Hourly Japanese Yen Strength Index stood neutral at +32.96 (higher than +75 represent a bullish trend).