TOKYO: Japanese government bond yields edged up on Tuesday, as investors awaited a key U.S. inflation report that could help determine the Federal Reserve’s interest rate path.
The two-year JGB yield rose 1.5 basis points (bps) to 0.125%. The five-year yield rose 1 bp to 0.335%.
“Investors adjusted their portfolio in run up to the U.S. consumer price index (CPI),” said Takeshi Ishida, strategist at Resona Holdings.
“U.S. Treasury yields seem to be under upward pressure.”
Tuesday’s CPI for January will help shape investors’ outlook on when the Fed could begin to cut interest rates.
Treasury yields were moving higher in recent days, as the latest payrolls report from the government showed the labor market remains on solid footing while several Fed officials, including Chair Jerome Powell, indicated they want to see further evidence that inflation was cooling before reducing rates.
JGB yields rise as 5-year bond auction sees lacklustre sales
The 10-year JGB yield was flat at 0.720%
Volatilities in JGB yields will likely small toward the BOJ’s March policy meeting as consensus is growing that pace of rate hike in Japan will be moderate even if the Bank of Japan tweaks its rate policy, said Ataru Okumura, a senior strategist at SMBC Nikko Securities.
With inflation having exceeded the BOJ’s target of 2% for well over a year, market players expect the central bank would end its negative rate policy as early as March.
The 20-year JGB yield was flat at 1.505% and the 30-year JGB yield rose 1 bp to 1.795%.
The 40-year JGB yield rose 0.5 bp to 2.010%.
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