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Japanese bonds trade narrowly mixed in subdued trade; BoJ Governor Kuroda’s speech in focus

The Japanese government bonds traded narrowly mixed Thursday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. Also, investors now await the Bank of Japan Governor Haruhiko Kuroda speech, which is scheduled to take place on Friday at 06:35 GMT.

The benchmark 10-year bond yield, which moves inversely to its price, fell ½ basis point to -0.06 percent, the yield on long-term 30-year Treasury remained steady at 0.50 percent and the yield on short-term 2-year note rose ½ basis point to -0.26 percent by 06:20 GMT.

Bloomberg reports a BOJ official telling Kyodo news agency that no further easing is expected from the BOJ at its monetary policy review meeting in November. The central bank is expected to downgrade its consumer price projections at the Oct. 31-Nov. 1 meeting, but the BOJ already has adjusted its stance by promising to take longer to reach its 2 percent inflation target.

Earlier, BoJ Governor Kuroda said that the consumer inflation is likely to be slightly negative or around zero percent for time being and Japan's economy continues to recover moderately as a trend. He said Japan's economy expected to expand moderately as a trend and Japan's financial system maintaining stability.

Added that the BOJ will maintain QQE with yield curve control for as long as needed to achieve 2 percent inflation in a stable manner and the central bank will adjust monetary policy as needed to maintain economy's momentum to achieve its price target. Further said that will continue expanding monetary base until core CPI stably exceeds 2 percent.

On the other hand, according to reports from the Nikkei over the weekend, the BoJ is expected to downgrade inflation forecasts at the next monetary policy meeting. It noted that the bank's most recent forecasts (contained in its quarterly economic and price outlook, published in July) are for 1.7 percent for fiscal 2017. It further cited that slow wage growth as a factor behind slow inflation.

Meanwhile, the benchmark Nikkei 225 closed up 1.39 percent at 17,235.50 and the broader Topix index closed 1 percent higher to 1,370.80 points.

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