JGBs slump ahead of 10-year auction, January consumer inflation

The Japanese government bonds slumped Wednesday as investors remain cautious ahead of the 10-year auction scheduled to be held on March 2. Also, expectations of a rise in January consumer price inflation (CPI) weighed on bond prices.

The benchmark 10-year bond yield, which moves inversely to its price, rose 1 basis point to 0.06 percent, the long-term 30-year bond yields jumped nearly 3-1/2 basis points to 0.83 percent and the yield on the short-term 3-year note remained traded 1 basis point higher at -0.18 percent by 05:40 GMT.

Japan's exports rose in January at a slower pace than the previous month due to a decline in shipments to the U.S. and the Lunar New Year holidays and as concerns about growing trade protectionism cast doubts over the outlook.

Further, exports in January rose 1.3 percent from the same period a year ago, less than the median estimate for a 4.7 percent annual increase and slower than a 5.4 percent year-on-year increase in December. It's the second month in a row exports have grown, following 14 straight months of contraction.

Lastly, the central bank on Wednesday purchased JGBs having residual maturity of 1-3 years worth JPY3.203 billion, maturity of 3-5 years worth JPY4.004 billion and other inflation-indexed bonds worth JPY251 million.

Meanwhile, Japan’s Nikkei 225 rose 1.46 percent to 19,398 at 05:50GMT, while at 05:00GMT, the FxWirePro's Hourly Yen Strength Index remained highly bearish at -141.01 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex