JGBs trade lower on broad sell-off following sudden slowdown in BoJ’s asset-buying program; eyes on two-tier economic data

Japanese government bonds fell during early Asian session at the start of the week Monday on broad-based debt sell-off in the market, following the sudden slowdown in the Bank of Japan’s bond-buying program. Also, investors shall keep a close eye on a host of two-tier economic data, scheduled to be released through this week for further direction in the debt market.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1 basis point to 0.08 percent, the yield on the long-term 30-year note hovered around 0.81 percent and the yield on short-term 2-year traded tad higher at -0.12 percent by 04:45 GMT.

For several years the BoJ has assured purchase of JPY80 trillion of domestic government bonds on an annual basis as part of its quantitative and qualitative easing (QQE) with yield curve control (YCC) program, a step taken to boost the economic health of the country and the underlying inflationary pressures after decades of underwhelming results. However, the central bank has failed to deliver on that aspect over the past year, with bond-buying falling to less than half the level stipulated by the bank.

The decline in asset purchases has got some in financial markets excited about an earlier-than-expected hawkish shift in BoJ monetary policy settings, contributing to some of the recent strength seen in Japanese yen.

Meanwhile, the Nikkei 225 index traded tad lower at 23,631.00 by 04:50 GMT, while at 04:00GMT, the FxWirePro's Hourly JPY Strength Index remained slightly bullish at 82.48 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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