TOKYO, Feb 21 (Reuters) - Japanese government bonds edged lower on Tuesday, taking their cue from higher U.S. Treasury yields, as investors awaited the next day’s expected buying operations by the Bank of Japan.
The yield on benchmark 10-year notes stood at 2.436 percent in Asian trading, compared with its U.S. close on Friday at 2.425 percent. U.S. markets were closed for the Presidents’ Day holiday on Monday.
The benchmark 10-year JGB yield inched up 0.5 basis point (bp) to 0.095 percent, while 10-year JGB futures finished up 0.01 point at 149.97.
The 30-year JGB yield rose 0.5 bp to 0.920 percent , matching its highest level since February 2016 logged in the previous session, while the 20-year yield was flat at 0.705 percent.
The 40-year JGB yield was also flat at 1.075 percent after earlier edging up to a one-year high of 1.080 percent.
Results of an auction of off-the-run JGBs, intended to enhance market liquidity, were largely in line with expectations, as the market’s focus shifted to Wednesday’s BOJ buying operations. One key point is whether or not the central bank will offer to purchase JGBs with five to 10 years left to maturity. Investors continue to ponder how much the BOJ will do under its “yield curve control” policy adopted last September, in which the central bank pledged to keep the 10-year yield around zero percent.
The likelihood of more Japanese monetary stimulus is diminishing, according to a Reuters poll of economists. Respondents were largely split on the central bank’s next policy move, signalling a possible turning point in expectations for the BOJ’s easing cycle.
BOJ Governor Haruhiko Kuroda said on Tuesday that it can’t be assumed that the BOJ will raise interest rates just because overseas rates are rising. (Reporting by Tokyo markets team; Editing by Eric Meijer)