TOKYO: Japanese government bond yields rose on Friday, rebounding from multi-week lows after US Treasury yields climbed overnight on the back of a weaker-than-expected 30-year bond auction.

The 10-year JGB yield rose 2.5 basis points (bps) to 0.860%.

The 20-year JGB yield rose 2 bps to 1.555%.

JGB yields kept falling until the previous session, underpinned by declines in the US yields and firm outcome of JGB auctions.

“JGB yields rose today obviously because US yields rose overnight,” Naoya Hasegawa, senior bond strategist at Okasan Securities, said.

US Treasury yields climbed also on hawkish remarks from Federal Reserve Chair Jerome Powell suggesting the US central bank may not be done hiking interest rates just yet.

“With recent JGB auctions witnessing firm outcome, the time may come soon for the BOJ (Bank of Japan) to start considering reducing the amounts of offer at its bond buying operations, given its massive ownership of JGBs,” Hasegawa said. The Bank of Japan last month tweaked its yield curve control (YCC) to loosen its grip on long-term interest rates.

But under its ultra-low interest rate policy, the BOJ continues its bond buying and maintains a significant presence in the JGB market.

JGB yields track down; better-than-expected demand at 30-yr bond auction

The BOJ owns about 70% of the most recently issued 10-year JGBs as of Oct. 31, according to Keisuke Tsuruta, fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.

Earlier on Friday, the BOJ conducted its regular bond buying operation and kept its offers for bonds across the curve unchanged from the previous operation.

Yields across the curve rose, with the 40-year JGB yield rising 1 bp to 1.955%.

The 30-year JGB yield rose 1.5 bps to 1.725%.

The five-year yield rose 1.5 bps to 0.415% and the two-year yield rose 0.5 bp to 0.110%.