JGBs trade higher following worse-than-expected October trade balance; national CPI remains in focus

The Japanese government bonds remained higher on the first trading day of the week Monday, following a worse-than-expected trade balance data for the month of October, released late yesterday.

Investors will now be focussing on the country’s national consumer price inflation (CPI) data for the similar period, scheduled to be released on November 21 for further direction in the debt market.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1-1/2 basis points to 0.095 percent, the yield on the long-term 30-year note fell 1 basis point to 0.852 percent while the yield on short-term 2-year remained tad lower at -0.144 percent by 05:40GMT.

Data released by Japan’s Ministry of Finance showed that the country’s October month trade balance slumped to a deficit of JPY449 billion (USD3.95 billion), nine times bigger than expectations of JPY48 billion deficit in a Nikkei survey.

The wider deficit in trade is the result of bigger imported volumes of crude oil and liquefied natural gas that boosted imports by 20 percent compared with a year ago, more than offsetting the 8 percent rise seen in exports owing to demand for automobiles, engines, and semiconductors.

Further, Japan’s trade surplus with the U.S. narrowed 11 percent on a y/y basis, while exports to China continued to outweigh the US’ effect and imports from China rose 16 percent on domestic demand for apparel and communications equipment, albeit an ongoing trade war between the U.S. and China that interrupted companies in carrying out their businesses smoothly.

Meanwhile, the Nikkei 225 index rose 0.54 to trade at 21,797.50 by 05:50GMT, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at -1.35 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex