The Japanese government bonds traded nearly flat Monday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. Also, investors now await the United States September consumer inflation data in an attempt to estimate the Fed's most likely step.
The benchmark 10-year bond yield, which moves inversely to its price, remained steady at -0.05 percent and the yield on short-term 2-year note hovered around -0.26 percent by 07:00 GMT.
Bank of Japan Governor Haruhiko Kuroda said that the consumer inflation is likely to be slightly negative or around zero percent for time being and Japan's economy continues to recover moderately as a trend. He said Japan's economy expected to expand moderately as a trend and Japan's financial system maintaining stability.
Added that the BOJ will maintain QQE with yield curve control for as long as needed to achieve 2 percent inflation in a stable manner and the central bank will adjust monetary policy as needed to maintain economy's momentum to achieve its price target. Further said that will continue expanding monetary base until core CPI stably exceeds 2 percent.
On the other hand, according to reports from the Nikkei over the weekend, the BoJ is expected to downgrade inflation forecasts at the next monetary policy meeting. It noted that the bank's most recent forecasts (contained in its quarterly economic and price outlook, published in July) are for 1.7 percent for fiscal 2017. It further cited that slow wage growth as a factor behind slow inflation.
Moreover, Japan’s October Reuters Tankan manufacturers' sentiment index rose to 10, compared to 5 in September. Further, the survey noted that manufacturers' confidence rose for a second straight month to reach 6-month high, driven by materials industries and food-processing firms.
Additionally, Japan industrial production (final) rose 1.3 percent m/m in August, from previous 1.5 percent. On an annual basis, it climbed 4.5 percent y/y, as compared to prior 4.6 percent. On the other hand, capacity utilization jumped 2.6 percent versus 0.6 percent.
Meanwhile, the benchmark Nikkei 225 closed up 0.26 percent at 16,900.12 and the broader Topix index closed 0.40 percent higher to 1,352.56 points.
