Yields edge up ahead of Bank of Japan announcement

Yields edge up ahead of Bank of Japan announcement

United Kingdom stocks opened lower on Monday as weak metal prices on concerns over slowing growth in China pulled down miners and investors adopted a cautious stance ahead of key central bank meetings in the U.S., Japan and the United Kingdom this week.

Spot gold eased 0.07 percent to $1,221.48. The FTSEurofirst 300 index .FTEU3 of leading European shares closed down 0.3 percent.

The Topix stock index sank 0.8% to the lowest in a week on the biggest decrease in nearly four weeks.

The technology index .SPLRCT tumbled 1.78 percent as disappointing results spurred concerns about future growth for a sector that has led USA equities to record highs.

"The BOJ never had, and under Kuroda probably never will have, any intention of turning hawkish", said Roberto Perli, a partner at Cornerstone Macro LLC in Washington and a former Fed economist.

"Productivity of Japanese firms is relatively low and there is significant room to raise productivity, mainly in the non-manufacturing sector", the BOJ said, adding that Japan's labour productivity is only 60 to 70 percent of the USA level. "The market is, at least for now, seeing this as negotiations as opposed to the beginning of an all out-out global trade war", Smith said.

The single currency edged up 0.05 percent against the dollar to $1.1713. Our outlook on the Japanese yen remains bearish.

US crude CLc1 added 24 cents to $68.93, while Brent LCOc1 rose 9 cents to $74.38 a barrel.

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On Monday, the euro was barely changed at $1.1660 EUR=EBS, corralled between support around $1.1570 and resistance at $1.1750. Analysts said the rebound was largely because traders felt it had been oversold last week.

The yen fell 0.4 percent to 111.49 per dollar, the weakest in more than a week.

While the yen is mostly lower today, Japanese government bond (JGB) yields are up sharply.

The Bank of Japan decides the text of the Outlook Report in April and October Monetary Policy Meetings and releases it semiannually, after it has presented its outlook for developments in economic activity and prices, has carefully assessed upside and downside risks, and has outlined its views on the future course of monetary policy.

The BOJ also retained a short-term interest rate of minus 0.1 percent for some funds that financial institutions keep parked at the central bank, but said that it will reduce the amount subject to the negative rate from the current 10 trillion yen ($90 billion) on average.

To take note of, yields on similarly-dated US Treasuries were also lower, trading down by three basis points to 2.95%. The open-ended plan pledged to keep interest rates at extremely low levels for an "extended period".

Following a two-day policy meeting, the Japanese central bank chose to maintain its target level for the yield on the 10-year government bond at around zero percent, but said the yield "may move upward and downward to some extent".

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