September 25, 2018 / 5:21 AM / 8 months ago

JGBs dip, 20-year yield hits 1-1/2-year high

TOKYO, Sept 25 (Reuters) - Japanese government bond prices dipped on Tuesday, with the benchmark 20-year bond yield hitting a 1-1/2-year high on wariness the Bank of Japan could trim buying in that maturity.

JGBs slipped on Friday after the central bank unexpectedly reduced its buying in 25 year-40 year bonds, lifting the 30-year yield to one-year highs, and the 40-year yield above one percent for the first time since November.

The Bank of Japan’s move raised suspicions that the central bank could cut its buying in 10 year-25 year bonds at its next buying on Thursday, or even if it does not, it could indicate a further reduction in bond buying plan for October.

The 20-year yield rose as high as 0.655 percent , its highest since March last year.

The 30-year yield rose 2.0 basis points to 0.905 percent , while the 40-year yield gained 3 basis points to 1.070 percent.

The 10-year also ticked up 0.130 percent, inching closer to 1-1/2-year high of 0.145 percent hit in early August, right after the BOJ said it will allow more flexibility in JGB trading.

The central bank maintained the size of its buying in 5 year-10 year bonds at 450 billion yen ($3.99 billion) at its operation on Tuesday. The 10-year JGB futures price dipped 0.02 point to 150.02.

($1 = 112.9000 yen)

Reporting by Tokyo Markets Team, Editing by Sherry Jacob-Phillips

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