Japanese government bonds rally ahead of BOJ data, speeches

By Rocky Swift

TOKYO, Sept 29 (Reuters) - Japanese government bonds (JGBs) rallied on Monday ahead of data and speeches from the central bank that may lend clues on the timing of its next interest rate hike.

The benchmark 10-year JGB yield fell 1.5 basis point (bp) to 1.64%. The five-year yield edged 0.5 bp lower to 1.22%.

Yields on short- and medium-term JGBs jumped to the highest since 2008 last week as speculation grew about a rate hike by the Bank of Japan as early as this month. Super-long bonds have rallied of late as yields near record highs drew in buyers and concerns about political uncertainty and fiscal deficits eased.

The BOJ's closely watched Tankan survey of corporate sentiment is due on Wednesday, followed by speeches from Deputy Governor Shinichi Uchida and Governor Kazuo Ueda later in the week.

The central bank may signal "changes in the nuance of its statements, leading to heightened caution in the market," said Resona Holdings' chief strategist Shinsuke Kajita.

"There's a sense that the ultra-long-term zone is becoming easier to buy," he added.

Markets have priced in roughly a 50% chance that the BOJ will raise rates in October. Also in focus is a party election on Saturday that will determine Japan's next prime minister following the resignation of fiscal hawk Shigeru Ishiba.

The 20-year yield fell 2 bps to 2.605%, while the 30-year yield slid 2 bps to 3.145%. (Reporting by Rocky Swift and Mariko Sakaguchi in Tokyo; Editing by Sonia Cheema)