JGBs gain as U.S.-China trade war fear sours investors' risk sentiment

Japanese government bonds gained during late Asian session Thursday as the trade war fear between the United States and China soured investors’ risk sentiments. Investors will now wait to watch the Bank of Japan’s (BoJ) monetary policy decision, scheduled to be unveiled on June 15 for further direction in the debt market.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1 basis point to 0.03 percent, the yield on the long-term 30-year note remained tad lower at 0.72 percent and the yield on short-term 2-year traded 1/2 basis point lower at -0.13 percent by 05:00 GMT.

The JGB market took in stride a decision by the Bank of Japan to trim the amount of mid-term maturity debt it offered to purchase at Thursday’s regular operation.

The central bank reduced the purchase of JGBs with three to five years to maturity to 300 billion yen ($2.72 billion) from the previous 330 billion yen.

The BOJ often tweaks the amount of JGBs it buys at these operations as a part of its yield curve controlling scheme, and the market had anticipated Thursday’s reduction as the central bank was expected to alleviate recently tight supply conditions.

Meanwhile, the Nikkei 225 index traded 0.71 percent lower at 22,804.00 by 05:10 GMT, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at -65.27 (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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