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JGBs shrink ahead of 10-year auction, expectations of higher April retail sales

The Japanese government bonds shrunk Monday as investors wait to watch the country’s 10-year auction, scheduled to be held later this week amid expectations of a rise in the Japan’s retail sales for the month of April, due for release on May 30.

The benchmark 10-year bond yield, which moves inversely to its price, rose nearly 1 basis point to 0.04 percent, the long-term 30-year bond yields also climbed almost 1 basis point to 0.80 percent while the yield on the short-term 2-year note traded flat at -0.16 percent by 06:10 GMT.

Japan's core consumer prices, released last week, rose 0.3 percent in April from a year earlier, lower than market expectations of 0.4 percent, marking the fourth straight month of increases and offering policymakers some hope a steady economic recovery will help shift consumers' sticky deflationary mindsets.

Excluding away the effect of fresh food and energy, consumer prices were unchanged in April from a year ago. Core consumer prices in Tokyo, available a month before the nationwide data, rose 0.1 percent in May from a year earlier, versus a 0.0 percent annual rise seen by analysts in a Reuters poll.

Meanwhile, Japan’s Nikkei 225 closed 0.02 percent lower at 19,682.57, while at 06:00GMT, the FxWirePro's Hourly Yen Strength Index remained neutral at 54.38 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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