JGBs nearly flat in subdued trade; BoJ’s policy decision in focus

Japanese government bonds traded nearly on Tuesday as investors remain remained sidelined in any major deal ahead of the last Bank of Japan’s monetary policy meeting of 2017.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat at 0.041 percent, the yield on new long-term 40-year remained steady 0.962 percent and the yield on short-term 2-year stood flat at -0.148 percent by 04:15 GMT.

The Bank of Japan is scheduled to announce its monetary policy decision on Thursday (December 21), which we expect to be uneventful, with policy firmly on hold. The central bank is expected to maintain its 'QQE with yield curve control' policy with a negative interest rate. However, the central bank will raise its target for 10-year bond yields next year from the current level of 0 percent to 0.25 percent.

In the United States, the Treasury yields rose as investors turn their focus to the proposed overhaul of the U.S. tax system. The yield on the benchmark 10-year Treasury note sat higher at 2.385 percent at 1:19 p.m. ET, while the yield on the 30-year Treasury bond was up at 2.735 percent. Bond yields move inversely to prices.

On Friday, Republicans released their final proposal to overhaul the country's tax system, which would look at slashing taxes for businesses, while trimming rates for individuals and modifying tax deductions. The House and Senate GOP are looking to pass the measure this week.

Meanwhile, Japan’s Nikkei 225 traded flat at 22,904.00 by 04:20, while at 04:00GMT, the FxWirePro's Hourly Yen Strength Index remained highly bullish at 102.62 (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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