Japanese bonds steady in lacklustre trade, next week’s 30-year auction in focus

The Japanese bonds traded nearly flat Friday as market awaits 30-year JGB auction scheduled for Tuesday, August 8 at 0345 GMT. Also, little trading activity is observed in the light of no important economic data or events.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat 0.065 percent, the yield on long-term 40-year note remained steady at 1.09 percent and the yield on short-term 3-year hovered around -0.1 percent by 04:20 GMT.

Takahide Kiuchi, former Bank of Japan Monetary Policy Board Member said that the BoJ cannot continue to purchase JGBs forever as the CB may reach the limit on JGB buying in the middle of 2018, however, the limit could be reached earlier if BOJ increases buying for YCC.

He also opposed the 10-year Japanese government bond yield target of around zero percent. He said that the 2 percent inflation goal is unachievable in foreseeable future and also the target is inappropriate. He said the government should accelerate structural reforms and the BoJ should begin policy normalization process.

On Monday, the Bank of Japan has maintained the target amount for its government bond buying programme at its regular market operations in August from July, the central bank's bond buying plan.

The BoJ kept the amount of buying steady in its six categories based on maturities, including 350-550 billion yen in JGBs with five- to ten-years to maturity.

Meanwhile, the Nikkei 225 index closed 0.37 percent lower at 19,956.00, while at 06:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at 24.94 (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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