JGBs remain flat ahead of BoJ’s monetary policy meeting

The Japanese government bonds traded flat Monday as investors remain cautious ahead of the Bank of Japan’s (BoJ) 2-day monetary policy meeting, scheduled to be held on March 15-16, announcing its decision on Thursday.

The benchmark 10-year bond yield, which moves inversely to its price, hovered around 0.09 percent, while the long-term 30-year bond yields rose nearly 1 basis point to 0.87 percent and the yield on the short-term 2-year note also traded nearly 1 basis point to -0.25 percent by 06:50 GMT.

The BoJ is expected to keep monetary policy steady on Thursday and stress that inflation is nowhere near levels that justify talk of withdrawing massive stimulus, as weak consumer spending casts a cloud over an otherwise healthy pick-up in the economy.

Further, at the two-day rate review that ends on Thursday, the central bank  is expected to maintain its short-term interest rate target at minus 0.1 percent and a pledge to guide the 10-year government bond yield around zero percent via aggressive asset purchases. Analysts also expect the BoJ to keep intact a loose pledge to maintain the pace of its annual increase in Japanese government bond (JGBs), which is JPY80 trillion (USD696.62 billion).

Lastly, the central bank on Wednesday purchased JGBs having residual maturity of upto 1 year worth JPY702 million and those with 5-10 years maturity worth JPY4.509 billion.

Meanwhile, Japan’s Nikkei 225 closed 0.16 percent higher at 19,635, while at 07:00GMT, the FxWirePro's Hourly Yen Strength Index remained neutral at -46.87 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex