JGB yields tick up tracking US peers as investors await fresh signals

By Brigid Riley

TOKYO, Nov 12 (Reuters) - Japanese government bond (JGB) yields inched up on Tuesday, tracking a rise in U.S. Treasury yields during Asian hours, as investors awaited fresh signals on the outlooks for the United States and Japan.

The 10-year JGB yield rose 0.5 basis point (bps) to 1%, where it has hovered this week, while 10-year JGB futures fell 0.05 points to 143.6 yen.

The U.S. Treasury market, whose movement the JGB market tends to follow, was closed on Monday for a public holiday but ticked up after trading resumed during Asian hours. U.S. yields touched multi-month highs last week as the market priced in a victory by Republican Donald Trump in the U.S. presidential election, fuelling concerns that his economic policies could dent the country's balance sheet and stoke inflation. That, in turn, has put upward pressure on JGB yields, while a weaker yen in the wake of Trump's win revived talks of whether the depreciation could prompt the Bank of Japan to raise interest rates as soon as December.

However, analysts at Mizuho Securities' fixed income department believe the recent rise in U.S. yields has been "somewhat excessive," and believe JGB yields to initially fall should U.S. yields decline.

"We expect a decline in U.S. rates would also send USD/JPY lower, thereby quashing expectations of an early BOJ rate hike," Chief Bond Strategist Noriatsu Tanji and Market Analyst Yurie Suzuki said in a report on Friday. Investors will also be watching Japan's third-quarter domestic production growth data due on Friday, after a summary of opinions from the BOJ's October monetary policy meeting showed policymakers were divided on how soon to hike rates.

The 20-year JGB yield was flat at 1.835%, while the 30-year yield rose 0.5 bp to 2.25%.

The two-year yield was unchanged at 0.495%, and the five-year yield edged up 1 bp to 0.65%, its highest since Aug. 1.

(Reporting by Brigid Riley; Editing by Varun H K)