Japan's bond yields track US peers higher

By Brigid Riley

TOKYO, March 12 (Reuters) - Japanese government bond (JGB) yields edged higher on Wednesday as a rise in U.S. Treasury yields overnight took the spotlight.

The 10-year JGB yield rose 1.5 basis points (bps) to 1.52%, following a rise in U.S. Treasury yields after news that Ukraine would accept a U.S. proposal for a ceasefire with Russia.

Benchmark 10-year JGB futures fell 0.42 points to 138.4 yen.

Market reaction was relatively muted to news that many of Japan's biggest companies have met union demands for substantial wage hikes, after the nation's largest labour union umbrella group said last week its unions were seeking an average hike of 6.09%.

Much of the focus on this year's "shunto" talks is whether there will also be strong pay gains at small and medium-sized firms.

Spring wage negotiations "tend to have a very predictable path...so I don't think it's going to be a major driver," said Shinichiro Kadota, head of Japan FX and rates strategy at Barclays, ahead of the news.

Given investors have already factored in further interest rate hikes by the Bank of Japan (BOJ), JGB yields seemed to be moving more in line with global yields, while liquidity issues in the market could persist until the end of March when the fiscal year comes to a close, he added.

BOJ Governor Kazuo Ueda on Wednesday said recent rises in bond yields were a natural reflection of market expectations of future interest rate hikes, underscoring the BOJ's resolve to keep raising short-term interest rates.

The 20-year JGB yield fell 1.5 bps to 2.255%. The bid-to-cover at the auction for the corresponding bond was 3.46, up from 3.06 in February.

The 30-year JGB yield was last up 0.5 bp at 2.585%, after touching its highest since July 2006 at 2.615% earlier in the day.

The two-year JGB yield rose 1.5 bps to0.845%, while the five-year yield climbed 2.5 bps to1.13%. (Reporting by Brigid Riley; Editing by Janane Venkatraman)