JGBs trade flat after BoJ leaves benchmark policy rate unchanged

The Japanese government bonds traded flat after the Bank of Japan (BoJ) left its benchmark policy rate unchanged at its monetary policy meeting held earlier today. Also, markets will be focusing on the country’s March consumer price inflation (CPI), scheduled to be released on April 28 for detailed direction in the debt market.

The benchmark 10-year bond yield, which moves inversely to its price, traded flat at 0.02 percent, the long-term 30-year bond yields hovered around 0.80 percent and the yield on the short-term 2-year note also remained steady at -0.18 percent by 06:20 GMT.

The BoJ voted to keep interest rates at -0.1 percent, where they have stood since the start of 2016. The decision was widely anticipated by the financial markets, which expect the Japanese central bank to maintain its low-rate pledge for the foreseeable future.

The central bank also voted to continue purchasing Japanese government bonds so that the 10-year JGB yield would remain at zero percent. The size of the government bond purchases was kept at JPY80 trillion annually.

However, central bank policymakers still have little to cheer about with consumer inflation barely above zero percent, as soft household spending discourages companies from raising prices. According to Reuters’ latest poll, Japan’s core nationwide consumer inflation during the month of April is seen to rise 0.3 percent y/y, (highest forecast at 0.4 percent y/y, while lowest is at 0.1 percent y/y), from 0.2 percent y/y in the previous month.

Meanwhile, Japan’s Nikkei 225 closed 0.19 percent lower at 19,251.87, while at 06:00GMT, the FxWirePro's Hourly Yen Strength Index remained neutral at -54.85 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex