JGBs trade mixed after November trade balance worsens beyond expectations; BoJ’s policy meeting closely eyed

The Japanese government bonds traded mixed on Wednesday after investors were disappointed by the worse-than-expected trade balance data for the month of November, released early today. Investors will now focus on the Bank of Japan’s (BoJ) monetary policy decision, due on December 20 for further direction in the debt market.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, rose 3-1/2 basis points to 0.035 percent, the yield on the long-term 30-year note slipped 1 basis point to 0.750 percent and the yield on short-term 2-year plunged nearly 15 basis points to -0.147 percent by 05:40GMT.

Japan logged a deficit of 737.3 billion yen ($6.6 billion) with the rest of the world, the second straight month of red ink following a revised 450.1 billion yen deficit in October.

Imports rose 12.5 percent from a year earlier to 7.66 trillion yen. Unrefined oil made the largest contribution, surging on the back of an earlier rise in global market valuations. However, exports only managed to edge up 0.1 percent to 6.93 trillion yen amid a slowdown in demand for smartphones in Asia.

Meanwhile, the Nikkei 225 index closed 0.59 percent lower at 20,991.50 by 05:45GMT, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained highly bullish at 150.01 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex