TOKYO: Japanese government bond (JGB) yields rose on Monday, tracking US Treasury yields higher, although caution around the Bank of Japan’s possible intervention to defend its target limited the sell-off.

The 10-year JGB yield rose one basis point to 0.235%. The US Treasury 10-year yield hit a three-year high on Friday and extended its advance during the Asian trade as traders bet on a more hawkish stance from the Federal Reserve.

“A sell-off of Japanese bonds was limited on caution that the Bank of Japan may step in again,” said a market participant at a domestic firm.

The central bank offered to buy unlimited amount of 10-year bonds at 0.25% in February and March, in an effort to defend its yield curve against the global tide of higher interest rates.

Under yield curve control, the BOJ sets its short-term rate target at -0.1% and that for the 10-year JGB yield around 0%.

Its current guidance is to allow the 10-year yield to move flexibly, as long as it is below an implicit 0.25% ceiling set around the target.

Super-long bond yields rose at a higher pace, with the 20-year JGB yield climbing 2.5 basis points to 0.770% and the 30-year JGB yield rising 2.5 basis points to 0.990%.

The 40-year JGB yield rose 2.5 basis points to 1.105%.

JGB yields fall on BOJ’s bond-buying operation

The two-year JGB yield was flat at minus 0.085%, and the five-year yield rose one basis point to 0.020%.

Benchmark 10-year JGB futures fell 0.20 point to 149.29, with a trading volume of 9,155 lots.