TOKYO: The benchmark 10-year Japanese government bond (JGB) yield inched up on Tuesday, tracking a rise in US Treasury yields, ahead of Treasury auctions that could determine whether there is enough demand for US government debt to push yields lower again.
US Treasury yields climbed overnight ahead of auctions for US three-year notes, 10-year notes, and 30-year bonds later in the week.
The US benchmark 10-year Treasury yield hovered near 4.64% during Asian trading hours.
The 10-year JGB yield ticked up 0.5 basis point to 0.88%, picking up from Monday’s one-week low of 0.865%.
While the short-end also rose marginally, the superlong 20-year JGB yield and 30-year JGB yield were down at 1.625% and 1.81%, respectively, sitting near their lowest levels in weeks.
With a lack of any strong drivers on Tuesday, the market was a little mixed, said Takeshi Ishida, a strategist at Resona Holdings.
Domestic economic data published in the Asian morning showed that Japan’s real wages slipped in September for an 18th month, but the latest numbers were largely in line with expectations, generating little ripple in the market, said Ishida, who sees greater market attention on wage data released closer to Japan’s “shunto” spring wage negotiations.
JGB yields track US peers lower on hopes of early Fed rate cuts
The Bank of Japan (BOJ) has repeatedly pointed to sustainable pay increases as one of the prerequisites for unwinding its ultra-loose monetary stimulus.
Speaking before business leaders in Nagoya, BOJ Governor Kazuo Ueda said on Monday that “there’s still uncertainty on whether the positive cycle (of inflation and wages) will strengthen, as we predict.”
In the meantime, the direction of US Treasury yields will be significant in the JGB market, said Ishida. While another surge in US long-term rates could push the 10-year JGB yield exceeding 1%, “I think concerns about rising yields have eased a little,” he said.
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