JGB yields track US peers higher as Japan reopens after holidays

By Kevin Buckland

TOKYO, May 7 (Reuters) - Japanese government bond yields rose on Wednesday, catching up with a climb in U.S. Treasury yields, as the local market reopened following a four-day weekend.

The 10-year JGB yield rose 1.5 basis points (bps) to 1.275% as of 0435 GMT, rising off a 3-1/2-week low from late last week.

Benchmark 10-year JGB futures fell 0.21 yen to 140.98 yen. Bond yields move inversely to prices.

Equivalent Treasury yields were steady at around 4.31%, compared with 4.23% at the end of Thursday.

The U.S. benchmark yield jumped almost 9 bps on Friday - after Japanese markets had already shut for the day - on the back of robust monthly payroll figures, and climbed as high as 4.378% on Tuesday.

Investors may also have refrained from buying 10-year JGBs ahead of an auction of the debt on Thursday.

Mizuho Securities strategist Noriatsu Tanji said that while the yield is about 10 bps lower than at last month's auction, volatility has declined considerably as well, which may make investors more confident about buying the debt.

The dovish tone at the Bank of Japan's meeting last week is also supportive, because "relatively large downward revisions" to growth and inflation projections "can be interpreted as a sign that the likelihood of an interest rate hike in the near term has decreased," he said.

The 20-year JGB yield rose 3 bps to 2.24%, a two-week high.

The 30-year JGB had not yet traded on Wednesday.

The two-year JGB yield was flat at 0.605%, and the five-year yield was steady at 0.82%. (Reporting by Kevin Buckland; Editing by Mrigank Dhaniwala)