JGBs remain tad higher following U.S. Treasuries as trade threats weigh, household spending falls

Japanese government bonds remained tad lower on the last trading day of the week following overnight rise in the United States Treasuries as fears over a trade war have not yet subsided and Japan looks to be on the list of next target by President Donald Trump.

Further, the country’s household spending data for the month of July, fell -1.1 percent m/m, albeit better than market expectations of -1.2 percent m/m, from 2.9 percent m/m in June.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, traded 1/2 basis point lower at 0.106 percent, the yield on the long-term 30-year note remained flat at 0.842 percent and the yield on short-term 2-year too hovered around -0.111 percent by 05:10GMT.

With the United States and China’s trade relations set to turn more bitter over the coming months, safe-haven buying still continues among investors. Further to that, the former is also targeting Japan on the trade context, with President Trump throwing challenge after China, Mexico and Canada.

The U.S. initial jobless claims missed expectations at 203k, but was 10k lower than the previous week, while the ADP employment added only 163k jobs, fewer than the anticipated 200k. Meanwhile, the non-manufacturing ISM improved more than expected from 55.7 (its weakest reading this year) in July to 58.5 in August, with new orders also rising from 57 to 60.4 and suggesting that the Q3 2018 GDP growth moderation could be more benign.

Meanwhile, the Nikkei 225 index traded 0.80 percent lower at 22,304.00 by 05:25 GMT, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at 60.87 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex