JGBs trade tad higher in quiet session ahead of Thanksgiving Day

Japanese bonds traded a tad higher on Tuesday as investors remained sidelined in any major deal ahead of the Thanksgiving Day holiday. The similar trend has been observed in the U.S. Treasuries, which saw a downward pressure across much of the curve during a relatively quiet session light on data of great significance and a general void in political commentary with Congress on Thanksgiving recess.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1/2 basis point to 0.034 percent, the yield on long-term 40-year also declined 1/2 basis point to 0.980 percent and the yield on short-term 2-year remained nearly steady at -0.195 percent by 03:00 GMT.

BoJ Governor Kuroda said the impact on long-term interest rates as a side effect of monetary easing. He noted that an "excessive decline" in long-term and super long-term interest rates "may give rise to concerns about the rates of return on insurance and pension products". This could have a negative impact on the economy "through a deterioration in people's sentiment".

He also mentioned the "reversal rate" -- the possibility that if the central bank lowers interest rates too far, capital constraints in the banking sector tighten as a result of the decline in net interest margins. This impairs financial institutions from carrying out their intermediation function, causing the effects of monetary easing to reverse.

Meanwhile, Japan’s Nikkei 225 traded 0.98 percent higher at 22,477.50 by 04:15, while at 04:00GMT, the FxWirePro's Hourly Yen Strength Index remained slightly bullish at 82.84 (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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