JGBs tad lower after Nikkei 225 surges to 7-month high following hopes of ease in U.S.-China trade tensions

Japanese government bond prices trade tad lower during late Asian session Friday after Nikkei 225 surged to a 7-month high following renewed hopes of ease in trade tensions between the United States and China.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad higher at 0.111 percent, the yield on the long-term 30-year note also climbed 1/2 basis point to 0.842 percent and the yield on short-term 2-year traded nearly flat at -0.108 percent by 05:40GMT.

According to a report from Reuters, a regular debt-purchasing operation by the Bank of Japan, however, helped limit JGB losses, however.

US President Trump also tweeted that there is “no pressure” to reach a trade agreement with China, but this did not significantly douse market hopes for the next US-Sino trade talks. Wall Street rose, led by tech stocks, while the UST bonds traded in a range (10-year yield rose 1bp to 2.97 percent) and the USD slipped amid softer than expected US inflation data (headline CPI rose 0.2 percent m/m and 2.7 percent y/y in August, with core CPI up just 0.1 percent m/m and 2.2 percent y/y), OCBC Daily Treasury Outlook reported.

Meanwhile, the Nikkei 225 index jumped 1.12 percent higher at 23,084 by 05:50GMT, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained highly bearish at -124.812 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex