JGBs trend higher despite upbeat Q2 GDP; June industrial production remains in focus

The Japanese government bonds continued to gain after a long weekend Monday as investors largely shrugged-off the upbeat reading of the country’s second-quarter gross domestic product, released over the weekend. Also, investors remain keen to watch the industrial production for the month of June, scheduled to be released on August 15 for further direction in the debt market.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded tad 1/2 basis point lower at  0.05 percent, the yield on long-term 30-year note slipped nearly 1 basis point to 0.84 percent and the yield on short-term 2-year traded flat at -0.11 percent by 05:50 GMT.

Japan’s gross domestic product expanded an annualized 4.0 percent in April-June, government data showed, more than the median estimate for 2.5 percent annualized growth and the biggest increase since January-March 2015. Compared to the previous quarter, the economy expanded 1.0 percent, versus the median estimate for 0.6 percent growth.

Annualized GDP for previous quarter was revised to a 1.5 percent increase, while quarterly real (inflation adjusted) GDP was revised up to 0.4 percent growth from a 0.3 percent increase.

Meanwhile, Japan’s Nikkei 225 traded 1.01 percent lower at 19,531.00 by 05:50GMT, while at 05:00GMT, the FxWirePro's Hourly Yen Strength Index remained neutral at 73.96 (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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