TOKYO: Japanese government bonds mostly edged lower on Thursday as investors took a breather ahead of Friday's U.S. jobs data, though the benchmark 10-year JGB firmed on dip-buying after its yield spiked to a 4 1/2-month high earlier this week.
The benchmark 10-year JGB yield inched down half a basis point to minus 0.095 percent, down from an earlier high of minus 0.070 percent.
It jumped as high as minus 0.025 percent on Tuesday, when JGBs marked their worst sell-off in more than three years on concerns that the Bank of Japan might reduce the pace of its aggressive JGB purchases.
"The JGB market has calmed down a lot, and people are now waiting for the US nonfarm payrolls report," said Tadashi Matsukawa, head of fixed income investment at PineBridge Investments in Tokyo.
Economists polled by Reuters are looking for U.S. non-farm employment to have risen by 180,000 in July.
The yield curve steepened as pressure remained on superlong maturities, with the 40-year JGB yield adding 3 basis points in thin volume trade to a four-month high of 0.450 percent.
Sources said earlier this week that the Japanese government will issue several hundred billion yen 40-year-bonds as soon as September to help fund its new 13.5 trillion yen stimulus package.
The 20-year JGB yield added 2.5 basis points to 0.285 percent, while the 30-year JGB yield rose 3.5 basis points to 0.390 percent, its highest since April 25.
"Probably, until the 30-year auction, it will be like this," said Matsukawa, as investors looked to the outcome of the sale to gauge supply conditions.
The Ministry of Finance will auction 800 billion yen ($7.90 billion) of 30-year JGBs on Aug. 9.
September 10-year futures were down 0.12 point in afternoon trade at 151.47.
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