TOKYO: Japanese government bond (JGB) yields rose on Monday amid investor caution over auctions to be held this week, after a series of auctions saw weak demand this month.

The 10-year JGB yield rose 0.5 basis point (bp) to 0.720%. The two-year JGB yield rose 1 bp to 0.055%.

The Ministry of Finance will hold auctions for two- and 10-year bonds this week.

“Market players are particularly cautious for the outcome of the two-year JGB auction because that duration is tend to be affected by the possible shift of the Bank of Japan’s policy,” said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management.

With the nation’s inflation exceeding the BOJ’s 2% target for more than a year, the central bank is seen ending its negative-rate policy in April the latest.

JGB yields rise on BOJ stimulus exit bets, weak 40-year bond auction

The weak results were partly due to the speculation for the BOJ’s policy tweak, which weakened at the begging of this month but grew after the BOJ’s policy meeting, said Inadome.

The bets for the early policy shift faded after the devastating earthquake hit the Noto peninsula on the New Year’s Day. But they grew again after BOJ Governor Kazuo Ueda said prospects of meeting inflation target were rising.

The five-year yield rose 0.5 basis point to 0.300%.

The 30-year JGB yield rose 2 basis points to 1.835%. The 40-year JGB yield rose 1 basis point to 2.075%.