JGBs trade range bound ahead of major central banks' policy meetings this week

Japanese government bonds traded range-bound at the start of the week on Monday as investors await the global central banks’ monetary policy decisions this week.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, traded 1/2 basis point lower at 0.046 percent, the yield on the long-term 30-year note remained steady at 0.719 percent and the yield on short-term 1-year moved 1/2 basis point down to -0.127 percent by 03:40 GMT.

Major central banks' are scheduled to meet this week, which includes the Federal Reserve, European Central Bank and Bank of Japan. We think the Fed will raise interest rates 25 basis points, and pare back its forward guidance as the fed funds rate approaches the Fed’s estimate of the neutral interest rate. We think the ECB is likely to make an announcement that it intends to end its asset purchase programme by the end of this year, with a short taper beyond September. We don’t expect any further guidance on interest rates: President Draghi is likely to reiterate that rates will stay on hold “well past” the December end date for QE. We expect the central banks of Japan and Chile to be on hold next week and the central bank of Russia to cut the policy rate by 25bp.

In the United States, Treasuries held tighter trading ranges to finish off the week on Friday, during a relatively quiet session light on economic data of great significance. At the time of writing, the U.S. 10-year Treasury yield traded 2-1/2 basis points higher at 2.959 percent.

Meanwhile, the Nikkei 225 index traded 0.54 percent higher at 22,816.50 by 03:50 GMT, while at 03:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at 42.56 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex