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JGBs weaken on expectations of rise in August CPI, retail sales

The Japanese government bonds weakened Wednesday, as investors expected to witness a rise in the country’s consumer price-led inflation index (CPI) for the month of August, scheduled to be released on September 28 by 23:30GMT. Also, the retail sales for August, due on the same day by 23:50GMT, will add detailed direction in the bond market.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1 basis point to 0.04 percent, the yield on long-term 30-year also climbed 1 basis point to 0.84 percent and the yield on short-term 2-year traded flat at -0.13 percent by 03:50 GMT.

Tuesday’s JPY500 billion (USD4.48 billion) 40-year JGB auction drew ample investor interest, with the bid-to-cover ratio, a gauge of demand, rising to 3.24 from 3.20 at the previous sale in July.

At a press conference Monday, Abe unveiled a slew of economic measures including more education spending. He said he’d pay for them with funds from a consumption tax increase originally intended to rein in the nation’s swollen debt.

Voting will be set for October 22, according to three people with knowledge of his ruling coalition’s plans. Heightened tensions with North Korea have boosted Abe’s approval rating after a series of scandals, and may help him retain his coalition’s two-thirds majority in the lower house of Parliament, Bloomberg reported.

Meanwhile, Japan’s Nikkei 225 traded 0.40 percent lower at 20,248.00 by 03:50GMT, while at 03:00GMT, the FxWirePro's Hourly Yen Strength Index remained neutral at 5.24 (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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