Japan Government Bond Update - March 2015

Key Points: 

• Economy grows more slowly than predicted in Q4 2014 
• Core CPI inflation drops to 0% in February 

According to data released by the Cabinet Office on March 9, the Japanese economy grew an annualised 1.5% in the last quarter of 2014, well below a preliminary reading of 2.2%. Quarter-on-quarter figures were also below expectations at 0.4%. On March 10, the mid yields on Japan’s 5-, 10-, 20-, 30- and 40-year benchmark bonds climbed to their highest values for the month. The 2-year benchmark bond mid-yield hit 0% on March 19, before rising to its month-high of 0.04% on March 31. 

For the first time in nearly two years, Japan’s core consumer price inflation was flat in February year-on-year, as data from its Statistics Bureau revealed on March 27. The mid-yield on the country’s 10-year government bond ended the day at 0.38%, almost five basis points higher from the previous market close, and finished the month at 0.39%.