JGBs trade modestly lower on profit-booking, month-end BoJ policy meet in focus

The Japanese government bonds traded modestly lower Friday as investors cashed in profits on the last trading day of the week after relishing previous gains, observing a relatively subdued trading session amid mild selling in the U.S. Treasures across the curve post the super-long 30-year bond auction held Thursday.

Also, investors are anxiously eyeing the month-end monetary policy meeting of the Bank of Japan, besides next week’s industrial production data

The benchmark 10-year bond yield, which moves inversely to its price, rose 1/2 basis point to 0.05 percent, the long-term 30-year bond yields hovered around 0.74 percent and the yield on short-term 2-year note also remained flat at -0.21 percent by 06:40 GMT.

The JGBs have been closely following developments in the U.S. debt market. The U.S. benchmark 10-year bond yields jumped 8 basis points to 2.38 percent, from yesterday’s low of 2.30 percent.

Lastly, the BoJ’s first two-day monetary policy meeting for 2017 will take place on January 30-31. We foresee that the central will remain committed to hold its 10-year JGB yields near zero, while keeping interest rate steady at -0.10 percent.

Meanwhile, the benchmark Nikkei 225 ended 0.80 percent higher 19,287.28, while at 6:00GMT, the FxWirePro's Hourly Yen Strength Index remained neutral at 42.90 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex