JGB yields hold near multi-decade highs ahead of 30-year auction

By Rocky Swift

Japanese government bond (JGB) yields held near multi-decade highs on Tuesday as fiscal and inflation concerns loomed before a sale of super-long-term debt.

Here are a few details:

• The benchmark 10-year JGB yield (JP10YTN=JBTC) was unchanged at 2.830%, holding at the highest level since October 1996. Yields move inversely to bond prices.

• The yield on the 30-year JGB (JP30YTN=JBTC) climbed 1 basis point (bp) to 4.085%, the highest since May 20.

• The Ministry of Finance will sell about 600 billion yen ($3.70 billion) in 30-year securities later in the session.

• JGB yields have been on the rise this month, particularly in the long and super-long end, driven by inflation concerns, a sharply weaker yen and worries about fiscal expansion.

• "This auction is therefore closely watched as a key indicator for gauging where the market will stabilise in the near term," Keisuke Tsuruta, a senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities, wrote in a note.

• The yield on the 20-year JGB (JP20YTN=JBTC) was unchanged at 3.805%, the highest in data going back to 1999.

• The two-year yield (JP2YTN=JBTC), the one most sensitive to Bank of Japan policy rates, held steady, while the five-year yield (JP5YTN=JBTC) was unchanged at 1.940%.

($1 = 162.1500 yen)