Japanese government bond (JGB) yields on Tuesday tracked European yields higher, although a smooth five-year note auction capped the rise.
The 10-year JGB yield ticked up 0.5 basis point to 0.235% by 0515 GMT, but well below the Bank of Japan’s 0.25% implicit ceiling for the security, which it tested repeatedly last week.
The five-year yield rose 1 basis point to 0.075%, but that was down from Monday’s high of 0.85%.
Longer-tenor yields rose more, with the 20-year yield up 1.5 basis points at 0.930%, and the 30-year rising 3 basis points to 1.240%.
“Rising European interest rates are weighing on the market,” said Shinsuke Kajita, chief strategist at Resona Holdings’ market planning department. “The market environment is unstable with a strong sense of uncertainty.”
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Overnight, German bund yields rose sharply amid signs of broadening inflationary pressures and more hawkish comments from policymakers.
There was no trading in Treasuries because of a US market holiday.
The JGB market’s mood was buoyed somewhat by a smooth sale of 2.5 trillion yen ($18.51 billion) of five-year debt, which one market participant at a domestic securities firm said confirmed “solid demand” from investors.
The two-year JGB yield edged lower by 0.5 basis point to -0.070%, after starting the day up 1 basis point at -0.055%.
Benchmark 10-year JGB futures were down 0.07 point at 147.92, but after trimming declines from the morning of as much as 0.36 point.
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