Japan bond yields track US peers lower amid smooth 30-year JGB auction
By Kevin Buckland
TOKYO, July 4 (Reuters) -Japanese government bond yields declined on Thursday, tracking a steep fall in U.S. Treasury yields overnight as a slew of weak economic data boosted bets for Federal Reserve interest rate cuts this year.
An auction of some 680 billion yen ($4.21 billion) of 30-year JGBs was smoothly digested by the market, but analysts said some investors took the opportunity to sell off-the-run bonds for new issues, which led to a slight rise in that sector of the yield curve.
The 10-year JGB yield JP10YTN=JBTC fell 1.5 basis points (bps) to 1.08% by 0635 GMT, while the 30-year yield JP30YTN=JBTC rose 0.5 bp to 2.275%, reversing earlier declines.
Benchmark 10-year JGB futures 2JGBv1 closed 0.27 yen higher at 142.76 yen.
The 10-year yield reached 1.1% on Wednesday for the second time since the end of May. Prior to that, the yield hadn't been that high since 2011.
"I don't think people see 1.1% as a barrier - there's no reason it wouldn't break above that," with a potential catalyst coming on Friday in the form of U.S. nonfarm payrolls data, said Shoki Omori, chief Japan desk strategist at Mizuho Securities.
The rise in JGB yields has been spurred by overseas bond moves and growing expectations for near-term Bank of Japan policy tightening, partly to help support the yen as it slumps to 38-year lows to the dollar.
On Thursday, the five-year JGB yield JP5YTN=JBTC sank 1.5 bps to 0.575%, and the two-year yield JP2YTN=JBTC fell 0.5 bp to 0.34%.
The 20-year yield JP20YTN=JBTC was flat at 1.935%.
The 10-year Treasury yield US10YT=RR sank close to 9 bps to 4.347% on Wednesday. There was no trading in Treasuries on Thursday due to a U.S. holiday.
($1 = 161.3600 yen)
Reporting by Kevin Buckland; Editing by Subhranshu Sahu
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