JGBs continue upside ahead of November trade balance data, BoJ’s monetary policy meeting

The Japanese government bonds continued to gain on the second trading day of the week Tuesday as investors wait to watch the country’s trade balance data for the month of November, scheduled to be released today by 23:50GMT. Also, the Bank of Japan’s (BoJ) monetary policy decision, due on December 20 is awaited by market participants for further direction in the debt market.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, slumped 3 basis points to 0.030 percent, the yield on the long-term 30-year note suffered 1-1/2 basis points to 0.761 percent and the yield on short-term 2-year plunged 15 basis points to -0.153 percent by 05:40GMT.

According to a report from Reuters, the BoJ is seen maintaining its ultra-easy monetary settings even as years of heavy bond buying dries up market liquidity and hurts bank profits, leaving it well behind its U.S. and European counterparts in dialling back crisis-mode stimulus.

The report further said that the central bank will tolerate negative long-term rates, as long as the 10-year yield moves within the range of around minus 0.2 to plus 0.2 percent set in July, according to sources familiar with the central bank’s thinking.

Meanwhile, the Nikkei 225 index closed nearly 2 percent lower at 21,126.00 by 05:45GMT, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained highly bullish at 113.38 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex