By Kevin Buckland
TOKYO- Japanese government bonds (JGB) yields edged higher on Wednesday but lacked momentum amid a dearth of catalysts a day ahead of a keenly anticipated US consumer price report.
Monetary policy at home and in the United States remain the dominant themes for Japan’s bond market and the potential for the US inflation reading on Thursday to alter bets on the pace of the Federal Reserve’s easing added an air of caution.
The 10-year JGB yield rose 1 basis point (bp) to 0.93 percent as of 0552 GMT, staying at the top of its range of the past month.
Benchmark 10-year JGB futures fell 0.11 yen, to 144.15 yen. Bond prices move inversely to yields.
The five-year yield added 1 bp to 0.55 percent, its highest since Aug. 2, ahead of an auction of the securities on Thursday.
The two-year yield was flat at 0.4 percent.
At the long end, the 20-year yield advanced 1.5 bps to 1.72 percent, while the 30-year yield gained 1 bp to 2.14 percent.
Japan’s prime minister, on Wednesday, reiterated that exiting deflation remains the top priority, suggesting that the central bank has no urgency to raise rates further for now.
Mizuho Securities chief bond strategist Noriatsu Tanji said the current wage growth of around 3 percent may not be enough to sustainably achieve the Bank of Japan’s 2 percent inflation target.
“It is a delicate question whether or not underlying inflation will accelerate,” he said.
“Considering the uncertainty over whether next year’s spring labor negotiations will be better than this year’s, it seems that there are still a number of hurdles to overcome.”-Reuters
