JGBs trade tight after May consumer price inflation meets estimates, June manufacturing PMI rises

The Japanese 10-year government bonds traded in a tight range on Friday after the country’s national consumer price inflation (CPI) for the month of May met market expectations, although remaining far from the Bank of Japan’s (BoJ) 2 percent target. In addition, Japan’s manufacturing PMI for the month of May recovered, adding to more sluggishness in bond prices.

The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, slipped slightly to 0.03 percent, the yield on the long-term 30-year hovered around 0.71 percent and the yield on short-term 2-year traded flat at -0.13 percent by 05:00 GMT.

According to the Ministry of Internal Affairs and Communications, the country’s core consumer prices increased 0.7 percent in May from a year earlier, as a result of higher energy costs. Prices rose for the 17th straight month, the statistics bureau said, but still remain well below the BoJ lofty 2 percent inflation target.

Further, the Flash Japan Manufacturing PMI rose to 53.1 in June, from 52.8 in May; output growth accelerated, despite a slower rise in new business.

Meanwhile, the Nikkei 225 index traded 0.80 percent higher at 22,527.00 by 05:10 GMT, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at -64.58 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex