Japan’s 10-year government bonds shed early gains to inch lower on Wednesday after a weak auction outcome weighed on sentiment.
The 10-year JGB yield (JP10YTN=JBTC) was last down 0.5 basis point (bp) at 1.665%, after falling to as low as 1.65% earlier in the session.
Bond yields move inversely to prices.
The auction of the 10-year JGBs received bids worth 2.97 times the amount sold on Wednesday, its weakest demand since May.
“Investors did not actively want to buy the 10-year bonds whose yield is not high enough,” said Miki Den, senior Japan rate strategist at SMBC Nikko Securities.
“There is a risk of the yield rising further as the Bank of Japan (BOJ) is set to raise its policy rate in the near future,” he said.
A growing number of policymakers at the BOJ believed that conditions were falling into place for interest rates to rise, with two members advocating an immediate increase, minutes of the central bank’s September meeting showed on Wednesday.
The five-year yield (JP5YTN=JBTC) fell 1.5 bp to 1.225%.
The 20-year JGB yield (JP20YTN=JBTC) fell 0.5 bp to 2.61%.
Bonds with 30- and 40-year maturities have not traded as of 0500 GMT, as investors refrained from active trade, said Den.
AloJapan.com