Mounting expectations that Japan's easy money policy will soon end pushed the 10-year Japanese government bond yield to a one-year high on Friday. Super-long bonds - those with maturities over 10 years - benefited from buying demand in bargain hunting after the 30-year yield jumped to an 11-month high on Thursday.
JGB yields have soared since September as an ongoing economic recovery convinces more dealers that the Bank of Japan will soon end its policy of flooding the market with excess funds, keeping interest rates near zero.
Although the debt market remains under heavy selling pressure, JGBs recovered some losses later in the day as dealers covered short positions. "Traders remain very bearish, but we saw a bit of short-covering in the afternoon, after the selling in the morning," said Akihiko Inoue, a market analyst at Mizuho Investors Securities.
"The market is exhausted," he said, adding that the debt market has been under heavy selling pressure all week.
The benchmark 10-year JGB yield briefly rose 1.5 basis points to 1.580 percent, its highest level in a year, before easing to 1.565 percent, unchanged on the day.
The 20-year JGB yield fell half a basis point to 2.175 percent after sliding to the day's low of 2.160 percent. The 30-year JGB yield traded at 2.55 percent after falling 2.5 basis points to 2.540 percent. In contrast, yields on short-term notes rose on growing expectations that the days are numbered for the Bank of Japan's so-called quantitative easing policy.
The two-year JGB yield rose two basis points to a 25-month high of 0.260 percent, while the five-year yield ticked up a basis point to 0.850 percent, after earlier rising to a 14-month peak of 0.870 percent.
Ten-year JGB futures for December delivery ended the afternoon session down 0.06 point at 136.80, recovering some losses as foreign investors were seen covering short positions after selling bonds all week.
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