TOKYO: Japanese government bond prices slipped slightly on Friday, once again taking directional cues from US debt prices that muted the impact of sharply weaker Japanese equities.
US Federal Reserve chief Ben Bernanke told the Senate Banking Committee on Thursday it was too soon to judge if recent "mixed" signals from the US economy would prompt the central bank to delay plans to trim its bond buying this year.
But US debt prices fell on as upbeat data on jobless claims and factory activity supported the view the economy may be strong enough for the Fed to pare bond purchases sooner rather than later.
The benchmark 10-year yield inched up half a basis point to 0.805 percent, moving away from a five-week low of 0.800 percent touched late in the previous session.
The benchmark yield has mostly traded in a range between 0.80 percent and 0.90 percent since late May.
Ten-year JGB futures ended morning trade flat at 143.38, after wobbling in a narrow range between 143.28 and 143.42. JGB futures trading was relatively inactive in light of the morning's gyrations in the stock market.
The Nikkei Stock average slid 1.1 percent, reversing gains of more than 1 percent that brought it to a two-month peak, as some investors took profits before this weekend's Japanese election.
Prime Minister Shinzo Abe's ruling bloc is expected to win Japan's upper house election on Sunday, handing him more power to pursue his aggressively reflationary policies.
Ahead of the election, weekly capital flow data from the Ministry of Finance showed Japanese investors were net buyers of foreign bonds for a second straight week last week by purchasing the largest amount since September 2012.
Should the trend towards net buying continue, it could provide another piece of early evidence that Abe's expansionary stimulus policies are having their desired effect.
"I think a lot of the banks have started to buy US Treasuries or German Bunds because yields have gone up a lot, but I don't think life insurance companies have really changed their game plan so much," said Tadashi Matsukawa, head of Japan fixed income at PineBridge Investments.
The five-year yield rose half a basis point to 0.290 percent, moving away from the previous session's five-week low of 0.285 percent.
The superlong zone underperformed, with the 30-year yield rising 2 basis points to 1.850 percent. The 20-year yield added 1.5 basis points to 1.725 percent.
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