JGB yields rise on tepid 5-year auction, softer US bonds

TOKYO: Japanese government bond yields ticked higher on Tuesday, following a soft five-year JGB auction and as US bond yields bounced back sharply from a four-month trough as investors braced for a testimony from Federal Reserve Chair Jerome Powell.

The auction of 2.5 trillion yen ($22.63 billion) five-year JGBs on Tuesday drew lacklustre demand, with the tail, or the gap between lowest and average prices, widening to 0.03 from 0.02 in the previous auction.

The five-year yield rose 1.5 basis points to minus 0.095%, its highest since late May, though traders say there should be decent demand from investors at that level.

The 10-year JGB yield rose 1 basis point to 0.050%, while the 20-year JGB yield added 0.5 basis point to 0.430%.

The 30-year and the 40-year yield were unchanged at 0.670% and 0.740%, respectively.

Benchmark 10-year JGB futures fell 0.14 point to 151.67 by late afternoon trade.

The 10-year US bond yield rose back to 1.490%, jumping back from a four-month low of 1.354% touched on Monday.

All eyes are on Powell, who is expected to appear before the Congress later in the day. In prepared remarks he noted sustained labour market improvement and the recent increase in inflation.