JGBs close tad higher amid muted trading session tracking U.S. Treasuries on concerns over economic slowdown

The Japanese government bonds closed tad higher on the last trading day of the week Friday tracking a similar movement in the United States Treasuries, governing concerns over global economic slowdown after weaker-than-expected report on the strength of the U.S. services sector.

At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad lower at -0.211 percent, the yield on the long-term 30-year hovered around 0.354 percent and the yield on short-term 2-year suffered 4 basis points to -0.329 percent.

The Institute for Supply Management's (ISM) Non-Manufacturing Index posted a significant decline in September, falling 3.8 points to 52.6 in September from 56.4 in August. This marks the lowest level since August 2016. The headline print was considerably below of consensus expectations, which called for a smaller decline to 55.0.

Factory orders fell 0.1 percent in in August, whilst orders excluding transportation were flat. Initial jobless claims rose 4k to 219k and the Challenger job cuts fell 24.8 percent y/y in September.

Fed rhetoric remains diverse - Evans said that he’s very concerned about inflation, hence he’s open about the next rate cut even though the US economy should grow by around 2.25 percent this year with inflation just under 4 percent, whilst Kaplan opined that the two rate cuts so far have helped to “reduce the likelihood of a very severe slowdown but doesn’t eliminate it” so he prefers to move “sooner rather than later”, OCBC Treasury Research reported.

Meanwhile, the Nikkei 225 index closed 0.32 percent higher 21,410.20.