JGBs slide on expectations of slightly higher core CPI; investors await BoJ Governor Kuroda’s speech

The Japanese government bonds slid Wednesday on expectations of a slight rise in the country’s core consumer price inflation for the month of May, scheduled to be released on June 30. In addition, the Bank of Japan’s (BoJ) Governor Kuroda’s speech, at the European Central Bank’s Sintra Forum on Central Banking late today will add further clarity to the debt market.

The benchmark 10-year bond yield, which moves inversely to its price, rose nearly 1 basis point to 0.05 percent, the long-term 30-year bond yields hovered around 0.82 percent and the yield on the short-term 2-year note also traded flat at -0.12 percent by 06:00 GMT.

Japan’s retail sales figures, having grown in each month so far in 2017, leapt 1.4 percent m/m, the most in six months in April, payback seems likely this time around, with sales expected to have dropped about 1.0 percent m/m in May.

In particular, headline CPI is forecast to have edged up 0.1ppt to a six-month high of 0.5 percent y/y. Other May data due on Friday include May’s preliminary IP figures, which are expected to show a drop of 3.0 percent m/m, following the 4.0 percent m/m rise in April.

Meanwhile, Japan’s Nikkei 225 closed 0.47 percent higher at 20,130.41, while at 06:00GMT and the FxWirePro's Hourly Yen Strength Index remained highly bearish at -150.33 (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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