JGBs remain tad lower after Tokyo July CPI beats market estimates; BoJ’s policy decision in focus early next week

The Japanese government bonds remained tad lower on the last trading day of the week after Tokyo’s headline consumer price inflation slightly beat market expectations. Investors will now focus on the Bank of Japan’s (BoJ) monetary policy meeting, scheduled to be held early next week for further direction in the debt market.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 2-1/2 basis points to 0.09 percent, the yield on the long-term 30-year note surged nearly 3-1/2 basis points to 0.81 percent and the yield on short-term 2-year too traded 1 basis point higher at -0.11 percent by 05:20GMT.

Tokyo’s core consumer prices rose 0.8 percent in July from a year earlier, accelerating for a second straight month but offering little comfort to the Bank of Japan as it struggles to reach its elusive 2 percent inflation target, Reuters reported.

According to few media reports, the BoJ is considering to adopt few policy changes at its upcoming meeting on July 31, speculation around which rattled global debt markets thoroughly. However, we do not foresee any major changes to the central bank’s policy stance until at least next year.

Meanwhile, the Nikkei 225 index traded 0.44 percent higher at 22,682.00 by 05:40GMT, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at 65.64 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex