SINGAPORE: Japan’s government bond futures fell on Monday as investors remain cautious of the next move from the Bank of Japan, while the Federal Reserve meeting this week was also in focus after US data highlighted persistent inflation.

Benchmark 10-year JGB futures fell 29 yen to 148.15, with trading volume at 7,648 lots.

The 20-year JGB yield rose 2.5 basis points to 1.090%, while the five-year yield rose 1 basis point to 0.125%.

The US central bank is widely expected to increase interest rate by 50 basis points later this week after four consecutive 75 bps hikes, but recent economic data has fanned fears that the Fed may have to keep interest rates higher for longer.

Japan’s 10-year bond yield stays at top of BOJ ceiling

“People are waiting to see the outcome of the US CPI data and the Fed meeting, as that should set the trend for coming weeks,” said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management.

The Bank of Japan’s moves will also be closely watched, with global investors reviving bets that the central bank will need to tweak its ultra-easy monetary policy soon after data showed consumer prices in Tokyo rose at their fastest annual pace in 40 years in November.

Kichikawa said people are feeling some uncertainty about the future course of the central bank’s monetary policy.

“We are receiving very mixed information from senior BOJ officials.”

Brokerage Mizuho said the expectations of the BOJ tweaking its policy is likely to persist but the hike in the short-term policy rate and changes to the banks’ yield curve policy have already been largely priced in.

The brokerage said it sees limited room for further moves in this direction without a shift in the BOJ’s messaging.