Japanese bonds plunge on investors higher risk appetite

The Japanese bonds plunged Wednesday as investors moved to riskier assets including crude oil and stocks. Energy prices rallied on Saudi Arabia's pledge to limit crude exports to help curb global oversupply.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1 basis point to 0.77 percent, the yield on 20-year note also jumped more than 1/2 basis point to 0.591 percent and the yield on short-term 3-year traded nearly 1 basis point higher at -0.072 percent by 04:40 GMT.

The JGBs have been closely following developments in oil markets because of their impact on inflation expectations. The International benchmark Brent futures surged 0.76 percent to USD50.58 and West Texas Intermediate (WTI) jumped 1 percent to USD47.37 by 4:40 GMT.

Japan's benchmark Nikkei 225 index climbed 0.5 percent to 20,055.29 following the upward momentum from a record day on Wall Street and buoyant oil prices offset by investor caution ahead of the Fed's upcoming interest rate decision.

On the data front, Japan June PPI (services) stood at 0.8 percent y/y, from prior 0.8 percent and revised from 0.7 percent.

On the other hand, the Bank of Japan’s Deputy Governor Hiroshi Nakaso said that the central bank will pursue current monetary easing to meet price stability target and the Japanese economy is expanding moderately, supported by the global economy and increase in domestic demand.

Meanwhile, Japan’s Nikkei 225 rose 0.48 percent to 20,051.00 by 05:10GMT, while at 05:00GMT and the FxWirePro's Hourly Yen Strength Index remained neutral at -59.71 (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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