Yield on 10-year JGB hits highest in nearly 2 months following U.S. Treasuries; BoJ’s status-quo limited gains

Japanese government bonds slumped on Thursday as the U.S. Treasury yields hit a 9-month high after House gives final approval to a sweeping tax overhaul. On the contrary, the Bank of Japan’s status-quo limited the growth in bond yields.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, climbed 1 basis point to 0.060 percent, the yield on new long-term 40-year also rose nearly 1 basis point to 0.971 percent and the yield on short-term 2-year gained 1/2 basis point at -0.140 percent by 04:00 GMT.

The BoJ held its monetary policy-setting unchanged as widely expected, making 2017 the first year since Haruhiko Kuroda became governor in 2013 that the central bank has taken no new policy action. The central bank also kept its yield curve control (YCC) of 10-year JGB steady at zero. This decision on yield curve control was made by 8-1 vote, board member Kataoka dissents. The Japanese central bank also left unchanged pledge to buy JGBs more or less at a current pace so its holdings increase at an annual pace of around 80 trillion yen.

In the United States, The Republican-controlled U.S. House of Representatives gave final approval to the biggest overhaul of the U.S. tax code in 30 years overnight, sending a sweeping $1.5 trillion bill to President Donald Trump for his signature. Many investors expect that tax cuts will help spur investment and spending that will, in turn, boost the economy and increase stubbornly low inflation, Reuters reported.

Meanwhile, Japan’s Nikkei 225 traded 0.05 percent lower at 22,880.00 by 04:25, while at 04:00GMT, the FxWirePro's Hourly Yen Strength Index remained slightly bearish at -71.24 (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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