JGB yields edge up in mixed session as market mulls July rate hike
By Brigid Riley
TOKYO, July 17 (Reuters) -Japanese government bond (JGB) yields ticked higher on Wednesday after choppy trading, as investors see-sawed on bets for the Bank of Japan (BOJ) raising interest rates later this month.
JGB yields fell in early trading, as market players speculated that a somewhat stronger yen may give the BOJ enough room to hold off on its second rate hike this year.
Buying of JGBs also received support after 10-year U.S. Treasury yields fell to a four-month low on Tuesday on expectations that the Fed could cut rates as soon as September.US/
But JGB yields reversed course in the Asian afternoon, after Japan's digital minister, Kono Taro, said in an interview with Bloomberg that the BOJ needed to raise rates to support the yen.
The benchmark 10-year JGB yield JP10YTN=JBTC fell to its lowest since June 26 at 1.005% before changing course. It was last up 1 basis point (bps) at 1.03%.
Meanwhile, 10-year JGB futures 2JGBv1 fell 0.16 yen to 143.22 yen.
"While the (market) view that additional rate hikes may still be a little ways off remains, given that news, investors are nevertheless cautious," said Makoto Suzuki, senior bond strategist at Okasan Securities.
A portion of market players have been betting that Japan's central bank could raise rates from near-zero to slow the yen's fall.
But the currency sharply appreciated from the upper 161 range to 157.40 on Thursday and rallied again on Friday in what is suspected to have been another round of currency intervention by Japanese authorities.
Suzuki says that he sees about a 50% chance of a July hike, with the yen's recent rally not making a significant difference.
The two-year JGB yield JP2YTN=JBTC, which corresponds more closely with monetary policy expectations, climbed 1.5 bps to 0.325%.
The five-year yield JP5YTN=JBTC rose 1 bp to 0.57%.
The 20-year JGB yield JP20YTN=JBTC was flat at 1.85%, while the 30-year JGB yield JP30YTN=JBTC ticked up 0.5 bp to 2.165%.
Reporting by Brigid Riley; Editing by Janane Venkatraman
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