JGBs trade lower in muted session after U.S. House of Representatives nods for Budget

The Japanese government bonds traded lower Friday after Congressional Republicans moved to hasten an overhaul of the U.S. tax code on Thursday, while Federal Reserve officials warned in rare public remarks that President Donald Trump’s tax plan could lead to inflation and unsustainable federal debt.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1 basis point to 0.04 percent, the yield on long-term 30-year climbed 1-1/2 basis points to 0.88 percent and the yield on short-term 2-year traded tad higher at -0.13 percent by 04:15 GMT.

In a procedural step forward, the Republican-controlled House of Representatives approved by a 219-206 vote a fiscal 2018 spending blueprint to help advance an eventual tax bill. The blueprint contains a legislative tool that would let Republicans pass a tax bill by a simple majority vote in the Senate, where they hold 52 of 100 seats, allowing them to bypass Democrats.

Separately, the Senate Budget Committee approved its own budget resolution and sent it to the full Senate for a vote, expected after October 16. Trump and top Republicans in Congress hope to enact a package of tax cuts for corporations, small businesses and individuals before January, pledging that sharply lower taxes will boost U.S. economic growth, jobs and wages.

Meanwhile, Japan’s Nikkei 225 rose 0.30 percent to 20,691.00 by 04:20GMT, while at 04:00GMT, the FxWirePro's Hourly Yen Strength Index remained highly bearish at -103.72 (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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