The Japanese short-term government bonds traded nearly flat on Thursday, succumbing to thin trading activity during a relatively quiet session that saw little data of much significance. On the other hand, long-dated JGBs extended their earlier losses amid a lack of the BoJ buying.
The yield on the benchmark 10-year bonds, which moves inversely to its price hovered around -0.22 percent mark, short-term 2-year JGB yield remained steady at -0.298 percent, super-long 40-year bonds jumped 2-1/2 basis points to 0.132 percent and the yield on 30-year JGB climbed more than 3 basis points to 0.122 percent by 06:40 GMT.
Interestingly, investors did not react to the weak Japanese May preliminary industrial production, which fell -2.3 percent m/m, higher than the market consensus of -0.2 percent fall, from up +0.5 percent in April. Also, it dipped -0.1 percent y/y against market expectations of +1.9 percent, from previous -3.3 percent.
On Wednesday, the Bank of Japan Governor Kuroda said that Japanese banks have no problem with FX funding and they can add funds to market if necessary. Markets have calmed down in the short-term after Brexit vote, he added.
Japan May retail sales remained flat at 0.0 percent m/m, in the line of market consensus of 0.0 percent, from -0.1 percent in April. However, it fell 1.9 percent y/y, against market expectation of -1.6 percent, as compared to -0.9 percent in April.
Moreover, Japan Prime Minister Abe said that he is ready to mobilise all available policy measures to support Japanese economy and he wants the BoJ to provide ample funds to ensure market liquidity and intermediary functioning.
The Finance Minister Aso to pay utmost attention to FX, financial market moves and it is important for G7 to continue to deliver messages on market stability. He also mentioned that uncertainty and risks remain in financial markets after Brexit vote.
Markets will remain keen to focus on May consumer inflation due at 23:30 GMT, Q2 Tankan Large Manufacturers Index at 23:50 GMT and BoJ’s own core CPI figure on Friday at 05:00 GMT.
Meanwhile, the benchmark Nikkei 225 index closed up +0.06 percent at 15,575.92, and the broader Topix index closed lower 0.15 percent to 1,245.82 points.


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