JGBs range-bound ahead of July national CPI; risk sentiments remain buoyant

Japanese government bonds remained range-bound during late Asian session Thursday ahead of the country’s national consumer price inflation (CPI) data for the month of July, scheduled to be released today by 23:30GMT. However, risk sentiments remain supported in a muted trading that witnessed data of little economic significance.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained flat at 0.093 percent, the yield on the long-term 30-year note hovered around 0.845 percent and the yield on short-term 2-year too traded steady at -0.118 percent by 05:10GMT.

According to a report from FxStreet, citing analysts at ANZ Research, Japan’s July headline inflation is expected to have risen 1 percent y/y with core CPI gaining 0.3 percent y/y, up from 0.1 percent y/y in June.

In addition, "Conditions for higher inflation have been in place for some time now: the output gap is positive; the labour market is extremely tight with the unemployment rate at multi-decade lows (2.4 percent); wage growth is edging up, and, household inflation expectations are rising gradually. However, inflation has not recovered sustainably and the BoJ recently downgraded its inflation forecast," the report added.

Meanwhile, the Nikkei 225 index rose 0.25 percent to 22, 400.00 by 05:15GMT, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained highly bearish at -105.46. For more details, visit http://www.fxwirepro.com/currencyindex