Japan 10-year bond yields at 3-1/2 month high on higher risk sentiment, sound CPI data

The Japanese 10-year government bond yields hit a 3-1/2 month high Friday on rising risk sentiments after a flow of hawkish comments from various central bank governors at an ECB event in Portugal earlier this week. Also, the country’s sound consumer price inflation (CPI) for the month of June, albeit far from the BoJ’s target provoked investors away from safe-haven assets.

However, the disappointment observed in the country’s unemployment rate and industrial production for the month of May cushioned any further fall in bond prices.

In intraday trading, the benchmark 10-year bond yield, which moves inversely to its price, rose 1 basis point to 0.08 percent, the long-term 30-year bond yields also climbed 1 basis point to 0.85 percent while the yield on the short-term 2-year note hovered around -0.11 percent by 06:20 GMT.

Japan's core consumer prices rose 0.4 percent in May from a year earlier, government data showed on Friday. The core consumer price index, which includes oil products but excludes fresh food prices, compared with economists' median estimate for a 0.4 percent annual gain.

However, recent declines in energy prices and stubbornly slow wage growth could cloud the outlook and force the Bank of Japan next month to cut its rosy inflation projections yet again, reports said.

Lastly, the BoJ is expected to upgrade its economic assessment again but cut its inflation forecast at a quarterly review of its projections in July, according to sources citing Reuters.

Meanwhile, Japan’s Nikkei 225 closed nearly 1.00 percent higher at 20,033.43, while at 06:00GMT and the FxWirePro's Hourly Yen Strength Index remained neutral at -68.96 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest