Japanese government bond futures edged down from a one-month high on Wednesday as dealers booked profits ahead of the second half of the Golden Week holidays and a 10-year bond auction next week.
A 0.7 percent rise in the Nikkei share average prompted some selling while overall trading activity was subdued as many investors were off on holiday and dealers hesitated to build positions before US jobs data due out on Friday. June 10-year futures slipped 0.12 point to 134.46 in quiet trade, retreating from a one-month high of 134.61 hit on Tuesday.
Also weighing on JGBs was a fall in Treasuries the previous day after a report on US factory activity showed unexpected strength and lurking inflationary pressure. The benchmark 10-year JGB yield was up 1.5 basis points at 1.620 percent, bouncing from 1.595 percent hit the previous session, the lowest level since March 23.
"We saw selling of 10-year bonds as soon as their yields slipped below 1.6 percent on Tuesday, indicating that the market was feeling uncomfortable about chasing yields lower to 1.5 percent levels now," JGB analysts at Nikko Citigroup said in a note to clients.
The 20-year yield inched up 1.5 basis points to 2.060 percent, as buying by investors to match changes in a benchmark performance index at the month-end subsided.
The 30-year yield was up 2 basis points at 2.285 percent. Market players had shifted funds back to short- and mid-term bonds after the Bank of Japan outlined a tame inflation outlook in its twice-yearly economic report on Friday and stirred doubts about how soon the central bank could lift interest rates from the current 0.5 percent.
The five-year yield was up a basis point at 1.185 percent, ticking up from 1.175 percent struck on Tuesday, the lowest level since early April. Two-year yields edged up a basis point to 0.850 percent, edging towards a nine-month peak of 0.860 percent hit on Friday.
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