Japanese bonds trade flat in subdued trade, no major changes likely this week

The Japanese bonds traded nearly flat Thursday as market observed little trading activity in the light of no important economic data or events.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat 0.071 percent, the yield on long-term 40-year note remained steady at 1.01 percent and the yield on short-term 3-year hovered around -0.113 percent by 04:40 GMT.

The Bank of Japan’s board member Yukitoshi Funo while speaking at a meeting with business leaders in Sapporo on Wednesday said that the BoJ is still halfway to 2 percent price target and it is important to continue powerful easing to hit price target. He said price momentum still insufficient for CPI target and must push down real interest rates sufficiently to guard economy against negative shocks.

On Monday, the Bank of Japan has maintained the target amount for its government bond buying programme at its regular market operations in August from July, the central bank's bond buying plan.

The BoJ kept the amount of buying steady in its six categories based on maturities, including 350-550 billion yen in JGBs with five- to ten-years to maturity.

According to a report from the Nikkei, Japan's Q2 GDP, scheduled to be released on August 14, is seen at an annualized +2.6 percent, compared to that in the previous quarter, largely owing to higher domestic demand. Further, upbeat capital investment as well as personal consumption amid a recovery in corporate earnings are also expected to favour growth.

According to the today’s release, Japan's July Nikkei/Markit services PMI came in at 52.0, from prior 53.3 and the composite PMI came in at 51.8, down from prior 52.9

Also, Japan July Nikkei/Markit manufacturing PMI (final) came in at 52.1, tad lower than the preliminary reading of 52.2 and from 52.4 in June.

Meanwhile, the Nikkei 225 index traded 0.32 percent lower at 20,015 by 04:40 GMT, while at 04:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at -64.54 (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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