The Japanese government bonds traded nearly flat Friday amid very thin trading activity. Also, investors remain focussed on the next week’s national consumer inflation data in an attempt to estimate the BoJ's most likely policy step.
The benchmark 10-year bond yield, which moves inversely to its price, hovered around -0.06 percent mark, the yield on long-term 30-year Treasury remained steady at 0.50 percent and the yield on short-term 2-year note stood flat at -0.26 percent by 06:30 GMT.
Bank of Japan Governor Haruhiko Kuroda said that the central bank will evaluate appropriate yield curve at every meeting and added that ideal yield curve can change depending on economy and prices. He said that price conditions not very different from September and it is difficult to target specific yield rate or range. He also said that the BoJ's 80 trillion yen QQE target allows for some flexibility, but not immediately thinking of lowering the goal.
Further, Kuroda said that there was a view voiced in the previous BoJ policy meeting that the yield curve should be steeper and there is no need to set rigid range for 10 year JGB yield, and it would be inappropriate to do so. He said the BoJ may slow JGB buying if 10-year yield falls well below its target and does not see an immediate possibility of BoJ JGB buying falling sharply from current 80 trillion yen pace. Lastly, he added that the timeframe for achieving 2 percent inflation may be modified at this month's policy meeting from the current forecast it will be hit during fiscal 2017.
Moreover, 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.
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 down 0.30 percent at 17,184.59 and the broader Topix index closed 0.40 percent lower to 1,365.29 points.
