JGBs remain on the upside on expectations of fall in retail sales; BoJ Governor Kuroda’s speech in focus

The Japanese government bonds were pushed slightly higher across the curve on Tuesday, following hopes of a fall in the country’s retail sales for the month of May, scheduled to be released on June 29. In addition, the Bank of Japan’s (BoJ) Governor Kuroda’s speech, at the European Central Bank’s Sintra Forum on Central Banking on Wednesday will add further clarity to the debt market.

The benchmark 10-year bond yield, which moves inversely to its price, fell nearly 1 basis point to 0.04 percent, the long-term 30-year bond yields also slipped close to 1 basis point to 0.80 percent and the yield on the short-term 2-year note slumped nearly 2 basis points to -0.12 percent by 06:00 GMT.

After a quiet start to the week for economic data, the back end will bring several top-tier Japanese economic data for May, kicking off with retail sales figures on Thursday. Having grown in each month so far in 2017 and leapt 1.4 percent m/m, the most in six months in April, payback seems likely this time around, with sales expected to have dropped about 1.0 percent m/m in May.

Friday, meanwhile, brings several releases of note, including the latest inflation figures, which are expected to post slight increases on each of the main measures.  In particular, headline CPI is forecast to have edged up 0.1ppt to a six-month high of 0.5 percent y/y. Other May data due on Friday include May’s preliminary IP figures, which are expected to show a drop of 3.0 percent m/m, following the 4.0 percent m/m rise in April.

Meanwhile, Japan’s Nikkei 225 closed 0.36percent higher at 20,225.09, while at 06:00GMT and the FxWirePro's Hourly Yen Strength Index remained slightly bearish at -79.62 (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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