Benchmark JGB yields fall for third day as investors await BOJ rate decision

Japanese government bonds (JGB) rose on Friday, with the benchmark 10-year yield declining for a third straight session, as investors positioned their holdings ahead of the central bank's policy decision later in the day.

Here are a few details:

• The 10-year JGB yield JP10YTN=JBTC dropped 3.5 basis points (bps) to 2.955%. Yields move inversely to bond prices.
• The two-year yield JP2YTN=JBTC, the most sensitive to Bank of Japan policy rates, eased 1 bp to 1.850%, while the five-year yield JP5YTN=JBTC slipped 1 bp to 2.285%.
• Global bond markets saw yields decline overnight, with U.S. Treasury yields falling about 6 bps to 4.94%. Britain's 10-year gilt yield also declined, supported by easing oil prices and the Bank of England's pause on gilt sales.
• The BOJ is widely expected to raise its policy rate to 1.25%, the highest in 31 years. Governor Kazuo Ueda is scheduled to brief the media after the decision.
• "With a strong inclination to assess the meeting's outcome and the governor's press conference, trading during the day is likely to be dominated by a wait-and-see stance," Takayuki Miyajima, senior economist at Sony Financial Group, said in a note.
• Ahead of the BOJ's decision, data showed Japan's core consumer inflation held steady near the central bank's 2% target in August, highlighting mounting price pressures.
• "Ueda and the Bank of Japan in general will have no choice really but to strike a hawkish note, not only delivering a 25-basis-point hike, but warning explicitly over inflation risks and indicating quite clearly to markets that more rate hikes are on the way," said Matthew Ryan, head of market strategy at global financial services firm Ebury.