TOKYO: Japanese government bond yields dipped on Tuesday as Australian bond yields eased after the country's central bank decided to scrap its yield curve control (YCC) as expected but otherwise stuck to a dovish stance.

Investors looked to the US Federal Reserve's policy review on Wednesday, which is expected to announce tapering of its bond purchase. Japanese financial markets will be closed for a public holiday on Wednesday.

Ahead of the Fed, the Reserve Bank of Australia took a major step toward abandoned an ultra-low target for bond yields but also pledged to continue to buy government bonds at a pace of A$ 4 billion ($3.00 billion) a week until at least mid-2022 and emphasised that inflation was still too low.

Investors, who have expected the RBA to end its 0.1% target for April 2024 bonds after it has skipped buying in the paper last week, reacted by buying bonds, with the 10-year Australian bond yields falling 2.0 basis points.

"Australian bond yields dropped despite the RBA move, which helped to drive down US and Japanese yields," said Takenobu Nakashima, chief fixed income strategist at Nomura Securities.

The 10-year JGB yield fell 1 basis point to 0.080% while the 20-year JGB yield dropped 0.5 basis point to 0.465%.

At the shorter end, the two-year JGB yield was flat at minus 0.105% while the five-year yield fell 0.5 basis point to minus 0.085%.

In addition, the market was underpinned also after Prime Minister Fumio Kishida picked Foreign Minister Toshimitsu Motegi as his ruling party's secretary general, and not Sanae Takaichi, who is seen as supporting aggressive fiscal spending.

The 10-year US Treasuries yield dropped 2.8 basis points to 1.544% in Asian trade.