Japanese bonds trade nearly flat in quiet trading

The Japanese government bonds traded nearly flat on Wednesday, succumbing to thin trading activity during a relatively quiet session that saw little data of much significance.

The yield on the benchmark 10-year bonds, which moves inversely to its price hovered around -0.271 percent mark and the short-term 2-year JGB yield remained steady at -0.347 percent by 06:40 GMT.

In terms of data, May final industrial production fell 2.6 percent m/m, from -2.3 percent in April. It also dipped 0.4 percent y/y in May, compared to -0.1 percent y/y in April. Similarly, capacity utilization tumbled 2.4 percent compared to -1.0 percent in the month of April.

Moreover, Japan's adviser to Prime Minister Shinzō Abe, Koichi Hamada said that Japanese stocks have been oversold and helicopter money would be a risky gamble. He further added that it is best to co-ordinate Japan's fiscal and monetary stimulus.

The Japan's upper house election over the weekend concluded with a win for Prime Minister Shinzō Abe and his coalition partners. The Japanese PM Abe also confirmed that he will instruct economy minister Nobuteru Ishihara to compile economy stimulus package and ask to implement economic measures to support domestic demand.

Meanwhile, the benchmark Nikkei 225 index closed up +0.84 percent at 16,231.43, and the broader Topix index closed 1.13 percent to 1,300.26 points.