JGBs flat after industrial production rebounds; investors await 10-year auction

The Japanese bonds remained flat at the start of the trading week Monday after the country’s industrial production, release later yesterday, rebounded during the month of June. Also, investors are waiting to watch the 10-year auction, scheduled to be held on August 1 for further direction in the debt market.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price remained tad higher at 0.07 percent, the yield on the 30-year note climbed nearly 1 basis point to 0.87 percent and the yield on short-term 2-year hovered around -0.11 percent by 04:10 GMT.

A pick-up in global demand and a weak yen have helped Japanese exporters, lifting the nation’s economy to the longest run of expansion in a decade. Industrial production increased 1.6 percent (forecast +1.5 percent) in June from May, when it fell 3.6 percent. The decline in May partly reflected Golden Week holidays, when many factories cut back output.

Production rose 1.9 percent in the second quarter from the previous quarter, the biggest gain since the beginning of 2014. Also, production is forecast to have risen 0.8 percent in July and rise 3.6 percent in August. Measured year on year, production rose 4.9 percent (forecast +4.8 percent), Bloomberg reported.

Meanwhile, Japan’s Nikkei 225 slipped 0.08 percent to 19,943.00 by 04:10GMT, while at 04:00GMT and the FxWirePro's Hourly Yen Strength Index remained neutral at 69.51 (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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