Japan Government Bond Update - May 2015

Key Points: 

• Economy grew by 2.4% in Q1 2015 
• Core CPI index up 0.3% in April 
• Jobless rate drops to 18-year low 

Japan’s economy expanded by an annualised 2.4% in the first quarter of 2015, data from the Cabinet Office showed on May 20. The increase in business inventory levels, however, was the biggest contributor to the higher-than-expected GDP growth. 

On May 22, the IMF called on the Bank of Japan to reinforce its reform program and boost its asset purchases. A week later, the Ministry of Internal Affairs and Communications announced that the core consumer price index, which excludes fresh food, advanced 0.3% in April. In the same month, Japan’s unemployment rate dropped to 3.3%, its lowest level in 18 years. 

May was a fairly volatile month for JGBs: the 10-year government bond mid-yield ended the month 6.5 basis points higher at 0.39%, after peaking at 0.46% on May 13. The mid-yield on the 2-year benchmark bond was the only one to finish lower than the previous month end, albeit by less than one basis point.