JGBs slump after Japan’s economic growth worsens in Q3; 30-year auction eyed

The Japanese government bonds slumped on the first trading day of the week Monday after the country’s economic growth for the third quarter of this year worsened, disappointing market participants and investors will now remain focussed on Japan’s 3-year auction, scheduled to be held on December 11 by 03:35GMT for further direction in the debt market.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, slumped 20 basis points to 0.041 percent, the yield on the long-term 30-year note fell 6 basis points to 0.794 percent and the yield on short-term 2-year dipped 3 basis points to -0.143 percent by 05:40GMT.

Japan’s gross domestic product (GDP) shrank at an annualised rate of -2.5 percent in the July-September quarter, deeper than an initial estimate of a -1.2 percent contraction, revised data from the Cabinet Office showed on Monday. The revised figure was also sharper than economists’ median estimate for a -1.9 percent annualised decline in a Reuters poll, hurt by natural disasters and sluggish exports.

Further, growth contracted by -0.6 percent on a q/q basis, vs a preliminary reading of -0.3 percent and economists’ median estimate of a -0.5 percent decline.

Meanwhile, the Nikkei 225 index closed 2.07 percent lower at 21,233.27 by 05:45GMT, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at -24.42 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex