TOKYO: Japan’s 10-year bond yield rose on Wednesday, tracking US Treasury yields overnight higher, while yields on super-long securities fell amid the absence of an auction till the end of this month.

The 10-year JGB yield rose to as high as 0.435% in early trade, before trading at 0.435%, up 1.5 basis points (bps) from the previous session.

US Treasury yields rebounded from a brief decline on Tuesday after economic data showed a slowing rise in inflation, a day ahead of the Federal Reserve’s next interest rate decision.

“The yields on Japan’s mid-to-long term bonds rose after US Treasury yields rose in the previous session,” said Keisuke Tsuruta, fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities. “The absence of an auction for super-long bonds until the end of this month supports sentiment for super-long bonds.”

Yields on super-long end notes fell, with The 30-year JGB yield falling 0.5 bp to 1.235% and the 40-year JGB yield slipping 1 bp to 1.400%.

The 20-year JGB yield was flat at 1.005%. There will not be any auction for longer term notes until the Ministry of Finance sells 20-year bonds on June 27.

The five-year yield rose 1 bp to 0.080%.

JGB yields rise tracking US bond yields

The two-year JGB yield was flat at -0.080%. While investor shrugged off any chance of the Bank of Japan’s tweak on its ultra-low rate policy at a policy meeting this week, they may start sell-off of bonds toward the end of the year to hedge the rate rise, said Tsuruta.

“But it will all depend on the economic condition and inflation trend,” said Tsuruta.

Benchmark 10-year JGB futures fell 0.15 yen to 148.11, with a trading volume of 13,754 lots.