JGBs climb following the Fed’s dovish tone; investors eye June CPI, retail sales

The Japanese bonds climbed Thursday, following the overnight rise in U.S. bond prices after the Federal Reserve maintained a relatively dovish tone in its monetary policy statement, released yesterday. Also, investors are closely eyeing Japan’s consumer price-led inflation index (CPI) for the month of June, scheduled to be released today at 23:30GMT.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 0.70 percent, the yield on 30-year note also slipped nearly 1 basis point to 0.86 percent and the yield on short-term 2-year traded 1/2 basis point lower at -0.11 percent by 04:40 GMT.

In a widely expected move, the Federal Reserve kept interest rates unchanged on Wednesday. After its two-day policy meeting, the Federal Open Market Committee unanimously voted to hold the federal funds rate between 1-1.25 percent, citing mixed economic data. The Fed’s cautious, yet generally positive, economic statement follows a slew of mixed data, including disappointing first quarter GDP and soft inflation numbers.

Two new Bank of Japan (BoJ) Policy Board members on Tuesday expressed their resolve to attain the BoJ’s 2 percent inflation target, which has remained elusive. Japan’s jobless rate and inflation expectations have improved since the BOJ carried out a drastic monetary policy regime change in 2013 under Governor Haruhiko Kuroda, Kataoka told a press conference.

Meanwhile, Japan’s Nikkei 225 rose 0.14 percent to 20,078.00 by 04:40GMT, while at 04:00GMT and the FxWirePro's Hourly Yen Strength Index remained neutral at -50.47 (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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