By Kevin Buckland
TOKYO- Yields on the longest-dated Japanese government bonds fell on Tuesday following a well-received sale of super-long debt by the finance ministry, while short-term yields tracked their US peers higher.
The 30-year JGB yield fell 3 basis points (bps) to 2.040 percent by 0545 GMT, while the 40-year yield sank 2.5 bps to 2.300 percent.
The 20-year JGB yield eased 0.5 bp to 1.685 percent , while the 10-year yield was flat at 0.880 percent .
Japan’s Ministry of Finance offered 400 billion yen ($2.76 billion) of super-long JGBs in a liquidity enhancing auction, 100 billion yen less than it offered at the previous sale.
“It’s been pretty tight in terms of supply and demand” in the super-long end, said Shoki Omori, chief Japan desk strategist at Mizuho Securities.
Pension funds and other long-term investors are buying the bonds to lengthen duration into month-end, he said.
In terms of the broader trend for JGB yields, “it’s really up to the US “ Omori added.
US Treasury yields rose on Monday, making back some ground after the steep decline on Friday, when Federal Reserve Chair Jerome Powell sent a much more dovish signal than the market had expected. Yields ticked up further in Asian time on Tuesday.
Bank of Japan Governor Kazuo Ueda’s determination to continue with rate hikes will also continue to lift short-dated JGB yields, Omori said.
The two-year JGB yield rose 0.5 bp to 0.36 percent , while the five-year yield rose 0.5 bp to 0.495 percent.
Benchmark 10-year JGB futures fell 0.07 yen to 144.74 yen.
