Japanese government bond yields eased on Monday, after US Treasury yields dropped their most since March 2020 at the end of last week on expectations that the Federal Reserve will further hike interest rates to tackle soaring inflation.

The Japanese government is expected to auction about 2.7 trillion yen (about $20 billion) worth of 10-year JGBs on Tuesday.

The five-year yield fell 1 basis point to move into negative territory at -0.005%, while the 20-year JGB yield fell 0.5 basis point to 0.865%.

JGB yields fall as investors await BOJ’s bond-buying plans

Other notes saw less movement.

The two-year JGB yield was flat at -0.070% and the 10-year JGB yield remained at 0.215%, below the Japanese government’s implied policy limit of 0.25%.

“The 10-year rate is gradually starting to move away from the yield curve control limit of 0.25%, but it’s unlikely to fall much below 0.2% ahead of tomorrow’s auction,” said Gen Taniguchi, a market analyst at Mizuho Securities.

US Federal government offices, stock and bond markets will be closed on Monday for the Independence Day holiday, which is likely to have slowed down the volume of trading in Asia.

Benchmark 10-year JGB futures rose 0.06 point to 148.96.