JGBs resemble firm U.S. Treasuries; BoJ keeps policy rate unchanged

The Japanese government bonds gained ground Thursday, tracking firmness in the U.S. Treasuries after the Federal Reserve delivered a 25 basis points rate hike on Wednesday, in tandem with market pricing. Also the Bank of Japan (BoJ), in its 2-day monetary policy meeting that concluded on Thursday, kept its interest rate unchanged.

The benchmark 10-year bond yield, which moves inversely to its price, plunged 2 basis points to 0.07 percent, the long-term 30-year bond yields slumped 3-1/2 basis points to 0.84 percent and the yield on the short-term 2-year note traded nearly 1 basis point lower at -0.25 percent by 06:40 GMT.

The Fed delivered its second rate hike in three months on Wednesday, further adding that rate increases would only be "gradual," with officials sticking to their outlook for two more rate hikes this year and three more in 2018.

The BoJ kept monetary policy steady on Thursday and maintained a cautiously optimistic view on the economy, signalling that no expansion of monetary stimulus was forthcoming in the near future. In a widely expected move, the central bank maintained the 0.1 percent interest it charges on a portion of excess reserves that financial institutions park at the central bank.

At the two-day policy meeting that ended on Thursday, it also kept its yield target for 10-year Japanese government bonds around zero percent.

Meanwhile, Japan’s Nikkei 225 traded 0.03 percent higher at 19,583 by 07:10GMT, while at 07:00GMT, the FxWirePro's Hourly Yen Strength Index remained slightly bullish at 76.92 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex