TOKYO: Japanese government bond yields followed their US Treasury peers higher on Monday ahead of local holidays and a Federal Reserve meeting, despite a pledge by the Bank of Japan to offer to buy unlimited amounts of 10-year bonds every market day.

The Japanese central bank said on Thursday it would buy unlimited amounts of 10-year government bonds to defend an implicit 0.25% cap around its zero yield target every market day, instead of on an ad-hoc basis. The 10-year JGB yield rose 1 basis point to 0.225% and the 20-year JGB yield rose 1.5 basis points to 0.755%.

US Treasury yields rose slightly on Friday following data that showed monthly inflation surged by the largest amount since 2005 in March, capping the largest gain in benchmark 10-year yields since December 2009.

“Ahead of a three-day holiday in Japan and an FOMC (US Federal Open Market Committee) meeting, investors cut their position in futures,” said a market participant at a domestic bank.

Japanese markets will be closed from Tuesday to Thursday for the Golden Week holidays. “A rise of 50 basis points (in Fed rates) is already factored in, but there are uncertainties,” the market participant said.

Benchmark 10-year JGB futures fell 0.34 point to 149.28, with a trading volume of 17,687 lots.

Japan government bonds still, waiting on BOJ

The 30-year JGB yield rose 2.5 basis points to 0.995%.

The 40-year JGBs were not traded and the yield remained at 1.060%.

The two-year JGBs were not traded either and the yield was flat at minus 0.060%.

The five-year yield rose 1.5 basis points to 0.015%.