JGBs trade mixed ahead of Q3 GDP data, super-long 30-year auction also in focus

The Japanese government bonds traded mixed ahead of the third-quarter gross domestic product (GDP), which is scheduled later in the day. Also, investors remain keen to focus on the Thursday’s super-long 30-year auction.

The benchmark 10-year bond yield, which moves inversely to its price, fell nearly 1 basis point to 0.04 percent, the yield on long-term 30-year note jumped 1-1/2 basis points to 0.64 percent and the yield on short-term 3-year note slid 1/2 basis point to -0.15 percent by 07:00 GMT.

The government of Japan’s cabinet office is expected to release its third-quarter GDP data on December 7 at 23:50 GMT. The September quarter economic growth is expected to increase 0.6 percent q/q, as compared to 0.5 percent in Q2. On an annual basis, it is likely to jump 2.4 percent y/y, from previous 2.2 percent.

We expect the third-quarter GDP growth to be revised up. Real GDP growth could slow in the last quarter of 2016, assuming net exports add nothing after spiking in Q3, but IP is on track to accelerate and October consumption looked upbeat.

Meanwhile, the benchmark Nikkei 225 closed 0.74 percent higher at 18,496.69. While at 07:00 GMT, the FxWirePro's Hourly Japanese Yen Strength Index remained highly bearish for second straight day at -104.97 (lower than -75 represents bearish trend).