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JGBs nearly flat amid subdued trade participation; likely to follow crude prices

The Japanese government bonds traded nearly flat Thursday as investors refrained from engaging in bulky trading activity following a day of little significant data.  

The yield on the benchmark 10-year bonds, which moves inversely to its price, hovered around -0.056 percent mark, the yield on long-term 40-year note remained steady at 0.58 percent and the yield on short-term 2-year bonds stood flat at -0.27 percent by 06:30 GMT.

The Japanese bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Bank of Japan's target. Crude oil prices decline as investors cashed in profit after relishing previous gains. The International benchmark Brent futures fell 0.31 percent to $51.70 and West Texas Intermediate (WTI) also dipped 0.48 percent to $49.59 at 06:00 GMT.

Moreover, Bank of Japan governor Kuroda said that they do not expect to run out of JGBs to purchase for QE and buying foreign currencies is for the government to decide. Said the BOJ is prohibited from directly underwriting government debt and BOJ's QE will not lead to hyperinflation.

Further, Kuroda in its previous comments said that the bank still has a lot of room left to ease policy. On the other hand, Bank of Japan ex-board member Nobuyuki Nakahara to aide Japanese PM Abe said that the BoJ's yield curve control and negative rates are mistakes. He added that the central bank Governor Kuroda has ruined his chance of a second term.

Meanwhile, the benchmark Nikkei 225 closed up 0.47 percent at 16,899.10 and the broader Topix index closed 0.45 percent higher to 1,353.93 points.

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