Japanese government bonds (JGBs) recouped some early losses on Tuesday after weaker-than-expected machinery orders data reinforced the market's belief that the Bank of Japan will take its time in raising interest rates.
The benchmark 10-year yield pulled away from an earlier six-week high after the release of the figures, which showed a rise of 6.7 percent in August from July. The market had expected a gain of 11.4 percent.
The 20-year yield had risen to a two-month high as cautious investors took a fall in US Treasuries as a cue to sell. But analysts said that while the data gave a boost to the market, there was little change in expectations that the Bank of Japan will raise interest rates in the January-March quarter.
"There's been a bit of a reversal due to the machinery orders," said Takafumi Yamawaki, fixed income strategist at Morgan Stanley. "But on its own, the figure isn't likely to change the market's forecast for a BoJ rate rise."
JGBs showed limited reaction to North Korea's announcement on Monday that it had conducted an underground nuclear test, which some had expected could prompt flight-to-quality buying in bonds.
December futures ended the afternoon session 0.15 points lower after recovering most losses after the data. The contract trimmed losses after tumbling more than half a point at one stage to hit the day's low of 134.15.
The 10-year JGB yield was up two basis points at 1.720 percent, retreating from a six-week high of 1.755. The 20-year yield was up one basis point at 2.225 percent after climbing to 2.250 percent, the highest since 2.255 percent on August 18. The five-year yield was up two basis points at 1.170 percent, while two-year paper was yielding 1.5 basis points more at 0.675 percent.