JGBs tad lower after June CPI meets expectations, jobless rate trends lower

The Japanese bonds climbed Friday after the country’s consumer price-led inflation index (CPI) for the month of June, matched market expectations. At the same time, the country’s jobless rate also trended lower, adding to further sluggishness in the debt market.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1 basis point to 0.08 percent, the yield on 30-year note also climbed nearly 1 basis point to 0.87 percent and the yield on short-term 2-year hovered around -0.11 percent by 04:30 GMT.

Core consumer inflation in Japan rose for a sixth straight month in June but showed little sign of gaining upward momentum. Japan’s core consumer price index, which strips out the cost of fresh food, rose 0.4 percent year on year in June, unchanged from the previous month, according to the Ministry of Internal Affairs and Communications. That was in line with a median estimate of economists polled by Reuters.

Further, data on household expenditures showed overall household spending rose 2.3 percent year on year in June, recovering from a drop of 0.1 percent in May and coming in far above expectations of a 0.6 percent rise. Also, the labour market continues to tighten in Japan. The unemployment rate fell back to 2.8 percent in June from 3.1 percent in May.

Meanwhile, Japan’s Nikkei 225 slumped 0.61 percent to 19,958.00 by 04:40GMT, while at 04:00GMT and the FxWirePro's Hourly Yen Strength Index remained highly bullish at 111.92 (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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