Japanese bonds gain after BoJ Governor Kuroda recommits to policy easing, dovish September meeting minutes

Japanese government bonds gained on Monday as Bank of Japan Governor Haruhiko Kuroda spoke on its recommitment to the ultra-loose monetary policy until 2 percent inflation is achieved. Also, dovish September monetary policy meeting minutes moved investors towards safe-haven buying.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 2-1/2 basis points to 0.033 percent, the yield on long-term 30-year also slipped 2-1/2 basis point to 0.821 percent and the yield on short-term 2-year decline 2 basis points to -0.176 percent by 04:30 GMT.

Bank of Japan Governor Haruhiko Kuroda said on Monday the central bank was closely watching the economic effects of prolonged ultra-easy policy, particularly the damage it could inflict on financial institutions' margins. Kuroda said economic growth is gathering momentum and increasing the chances of inflation hitting his 2 percent target, reinforcing market expectations that no additional stimulus is forthcoming.

According to the September 20-21 meeting minutes, one Bank of Japan policymaker said the slope of the yield curve was not sufficient to achieve 2 percent inflation because there was an excess supply of capital stock and because the government was due to raise the sales tax in 2019. This member said a further increase in demand was needed to achieve 2 percent inflation.

Meanwhile, Japan’s Nikkei 225 traded 0.17 percent lower at 22,500.5 by 04:30, while at 04:00GMT, the FxWirePro's Hourly Yen Strength Index remained highly bearish at -112.42 (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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