JGB yields rise in step with US peers after blowout jobs report

By Brigid Riley

TOKYO, Oct 7 (Reuters) - Japanese government bond (JGB) yields rose on Monday, tracking a rise in their U.S. peers after stronger-than-expected jobs data suggested the world's largest economy was still resilient.

The 10-year JGB yield rose 3.5 basis points (bps) to its highest since Sept. 3 at 0.913%, while 10-year JGB futures fell 0.45 point to 144.23 yen.

The two-year JGB yield was up 3.5 bps to a two-month high of 0.4%.

U.S. 10-year Treasury yields climbed on Friday to their highest in nearly two months after the September employment report further weakened odds of big rate cuts at the Federal Reserve's remaining two meetings of this year.

Meanwhile, a weaker yen prompted investors to reassess chances of another rate hike from the Bank of Japan (BOJ) this year, contributing to the rise in JGB yields, said Naka Matsuzawa, chief macro strategist at Nomura Securities.

Bets for further rate hikes this year receded last week after new Prime Minister Shigeru Ishiba said Japan is not ready for an additional rate increase.

The U.S. dollar rallied following the jobs report, sending the yen down to its lowest level since mid-August on Monday. The yen was last hovering around 148.54 per dollar.

If the Japanese government becomes concerned with the yen's depreciation and begins to jawbone, "that definitely raises the chance of a BOJ rate hike earlier," said Matsuzawa.

Japan has conducted a series of interventions this year, selling the dollar to buy yen to prop up the battered currency. The last one was in late July after the yen fell to a 38-year low below 161 per dollar. The weakness in turn put pressure on the BOJ to raise rates.

The 20-year JGB yield climbed 3.5 bps to 1.69%, its highest since Sept. 20.

The 30-year JGB yield edged up 2.5 bps to 2.1%.

The five-year yield jumped 4 bps to a one-month peak of 0.53%.

(Reporting by Brigid Riley; Editing by Subhranshu Sahu)