Japanese government bonds (JGB) prices fell on Tuesday as hopes for strong domestic growth data pushed Japanese share prices to two-week highs, dulling the impact from a 20-year JGB auction. "The auction was fairly good," said Koji Shimamoto, chief bond strategist at BNP Paribas.
"There was good demand, as 20-year bonds are relatively cheap. But the strength in share prices hurt Japanese government bonds."
The yield on the benchmark 10-year cash Japanese government bonds was up two basis points at 1.270 percent, its highest in a week.
The benchmark five-year Japanese government bonds yield rose one basis point to 0.495 percent, the highest in nearly two weeks.
The yield on the current benchmark 65th 20-year Japanese government bonds climbed one basis point to 1.835 percent.
Key 10-year futures for March delivery dropped 0.26 point to 139.38.
Japanese government bonds sagged in afternoon trade as Japanese share prices extended gains, with the Nikkei share average hitting a two-week closing high of 10,701.13 ahead of Japan's gross domestic product (GDP) data on Wednesday.
Japan's GDP is expected to have expanded an annualised 4.6 percent in the October-December quarter. That would be the fastest growth in more than a year.
This comes after Japan's machinery orders data last week showed core private orders rose 8.1 percent in December, far above market expectations for a rise of around two percent.
"It will be difficult for Japanese government bonds to rise from here in light of the recent strength of the economic recovery," said Osamu Tamada, assistant manager at Mizuho Investors Securities.
Japanese government bonds yields dropped to their lowest levels in several months last week, with the benchmark 10-year yield hitting a 4-1/2-month low of 1.220 percent, gradually falling from a high of 1.675 percent in early September.
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