TOKYO: Japanese government bond yields fell on Wednesday, tracking U.S. Treasury peers’ declines, while a better-than-expected auction outcome supported sentiment.

The 10-year JGB yield fell 3 basis points (bps) to 0.810% and the five-year yield fell 1.5 bps to 0.420%.

U.S. Treasury yields declined on Tuesday after the release of a tame producer prices report that looked unlikely to divert the Federal Reserve from an easing path, with Wednesday’s consumer prices data set to fill out the inflation picture.

In Japan, the outcome of the five-year auction was not strong but it was better than market expectations, strategists said.

“The market was very cautious about the outcome of the five-year bond auction but the outcome was not as bad, which lifted market sentiment,” said Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management.

JGB futures edge higher in cautious trading before crucial US economic data

The two-year JGB yield fell 0.5 bp to 0.29%, while the two-year interest rate swap was 0.385%.

The 20-year JGB yield fell 4.5 bps to 1.635% and the 30-year JGB yield fell 3.5 bps to 2.020%.

The 40-year JGB yield was flat at 2.29%.