JGBs nearly flat in subdued trade; next week’s BoJ in focus

Japanese government bonds traded nearly flat in subdued trade on Friday as investors remained sidelined in any major deal ahead of the upcoming Christmas holidays. However, the market will look ahead to the next week’s last monetary policy decision from the BoJ.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat at 0.046 percent, the yield on long-term 40-year remained steady 0.959 percent and the yield on short-term 3-year stood flat at -0.150 percent by 04:20 GMT.

The Bank of Japan is scheduled to announce its monetary policy decision on Thursday (December 21), which we expect to be uneventful, with policy firmly on hold. The central bank is expected to maintain its 'QQE with yield curve control' policy with a negative interest rate.

In the United States, the Treasuries saw mixed performance overnight as short-end selling was contrasted by upward pressure further out the curve. With respect to data, markets received an indication of solid consumer activity in the form of considerably stronger than expected retail sales for November. This came alongside a pullback in initial jobless claim (down -11k to 225k) and further upward pressure in import prices (increasing +0.7 percent m/m in November, sponsored by considerable gains in petroleum prices).

Meanwhile, Japan’s Nikkei 225 fell 0.04 percent to 22,684.50 by 04:25, while at 04:00GMT, the FxWirePro's Hourly Yen Strength Index remained neutral at 72.99 (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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