JGBs slide as investors keenly await Fed monetary policy decision, February national CPI

The Japanese government bonds slid at the end of Asian session Wednesday as investors continue to keep a close eye on the Federal Reserve’s monetary policy decision, scheduled to be unveiled later in the day. Also, Japan’s national consumer price inflation (CPI) data for the month of February, due on March 21, will add further direction in the debt market.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, rose 5 basis points to -0.037 percent, the yield on the long-term 30-year also climbed 4 basis points to 0.567 percent and the yield on short-term 2-year hovered aorund -0.161 percent by 06:20GMT.

The Federal Reserve is expected to hold rates at its monetary policy meeting on March 21, in which the attention will be focused on potential growth downgrades and the possibility of a more dovish dot plot (currently two hikes in 2019 and one in 2020), according to a recent research report from DBS Economics and Strategy.   

The market is already positioned for a dovish outcome with 10-year UST yields hovering just below 2.60 percent, close to the bottom of its recent trading range. Shorter-term rates are even more aggressive, factoring in rate cuts in 2020, the report added.

Meanwhile, the Nikkei 225 index closed tad higher at 21,593.00, while at 06:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at 32.68 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex