JGBs trade range-bound ahead of 30-year auction, Q2 economic growth

The Japanese government bonds remained range-bound Tuesday as investors wait to watch the country’s super-long 30-year auction scheduled to be held on September 7 by 03:45GMT. Also, Japan’s final estimate of second-quarter gross domestic product (GDP) is due on September 7 by 23:50GMT, which will add further direction to the debt market.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, remained flat at 0.003 percent, the yield on long-term 30-year steady around 0.82 percent and the yield on short-term 2-year hovered around -0.15 percent by 02:50 GMT.

Japan’s headline seasonally adjusted Business Activity Index recorded 51.6 in August to extend the current period of growth to 11 months. However, falling from 52.0 in July and down for a second successive month, the rate of growth signaled by the survey was moderate and the lowest recorded since February.

In contrast, there was an improvement in the rate of expansion in manufacturing output to a three-month high. That subsequently meant that the Nikkei Composite Output Index moved broadly sideways during August, registering a level of 51.9, up fractionally from July’s nine-month low of 51.8.

"However, a slide in service sector confidence to a 13-month low provides a little concern that growth could continue to falter in the near-term," said Paul Smith, Director at IHS Markit.

Meanwhile, Japan’s Nikkei 225 fell 0.42 percent to 19,426.50 by 02:50GMT, while at 02:00GMT, the FxWirePro's Hourly Yen Strength Index remained slightly bullish at 80.23 (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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