JGB yields rise tracking U.S. Treasuries; curve steepest since 2015

BY Reuters | TREASURY | 06/28/22 01:48 AM EDT

TOKYO, June 28 (Reuters) - Japanese government bond yields rose on Tuesday, tracking U.S. Treasuries overnight, with the yield curve widening to its steepest level in six-and-a-half years.

The 30-year JGB yield rose 2.5 basis points to 1.305%, while 20-year yields added 1.5 basis points to 0.935% as of 0515 GMT.

At the short end, the two-year yield advanced 1.5 basis points to -0.055%.

The spread between two- and 30-year yields at one point reached 136.2 basis points, the widest since December of 2015.

Bonds have become more volatile due to lower demand towards the end of the quarter.

"Liquidity has decreased and volatility has increased," said Resona Holdings chief strategist Shinsuke Kajita.

"It is a difficult environment to buy things like super-long bonds."

Meanwhile, the five-year JGB yield rose 1 basis point to 0.050%. The 10-year yield was the most subdued, edging up 0.5 basis point to 0.235%, retaining a 1.5 basis-point cushion to the Bank of Japan's policy ceiling.

Benchmark 10-year JGB futures fell 0.09 point to 148.43.

(Reporting by Tokyo markets team; Editing by Amy Caren Daniel)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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