JGB yields tick up from one-month lows as BOJ Governor Ueda's speech eyed

BY Reuters | ECONOMIC | 01:17 AM EST

By Kevin Buckland

TOKYO, Dec 23 (Reuters) - Japanese government bond yields rose slightly from one-month lows on Monday, as traders awaited a speech by Bank of Japan Governor Kazuo Ueda later in the week for clues on the pace of monetary tightening.

The five-year JGB yield rose 1 basis point (bp) to 0.710% as of 0548 GMT, after falling to as low as 0.68% on Friday.

The two-year yield was flat at 0.57%, after dipping to 0.555% in the previous session for the first time since Nov. 20. Yields have been largely in retreat since BOJ Governor Ueda on Thursday sent a more dovish message than investors had expected, saying it would still take considerable time to assess the trend for domestic wages and global economic growth.

However, a sharp depreciation in the yen since then has put the market on alert for a more hawkish shift in Ueda's speech on Wednesday, said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui DS Asset Management.

Kichikawa expects a rate hike in either January or March, with policymakers waiting another six months from then to raise rates again, eventually reaching at least 1% for the benchmark rate.

That would mean 10-year JGB yields gradually rise to around 1.3-1.5%, he said.

In the current session, the 10-year yield added 0.5 bp to 1.055%.

Benchmark 10-year JGB futures fell 0.08 yen to 142.39. Prices and yields move inversely.

On the super-long end, the 20-year JGB yield rose 1.5 bps to 1.860%, while the 30-year JGB yield added 0.5 bp to 2.255%. (Reporting by Kevin Buckland; Editing by Varun H K)

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.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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