JGB yields track US peers higher, concerns about spending resurface

By Junko Fujita

TOKYO, Nov 6 (Reuters) - Japanese government bond yields tracked U.S. Treasury yields higher on Thursday, while market concerns about fiscal spending resurfaced as the country's new prime minister geared up for measures to support economic growth.

The 10-year JGB yield rose 2 basis points to 1.68%. The five-year yield rose 2 bps to 1.24%.

Bond yields move inversely to prices.

U.S. Treasury yields rose overnight after data showed continued U.S. economic resilience and a Treasury refunding announcement indicated potential future increases in long-dated debt issues.

Yields on Japan's super-long-dated bonds rose moderately, with the 20-year JGB yield rising 1 bp to 2.610% and the 30-year JGB yield up 0.5 bp to 3.085%,

"The curve extended its flattening trend in the past sessions, but it may steepen again as we see signs of big spending," said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management.

Prime Minister Sanae Takaichi's government on Tuesday created a new economic strategy panel, aiming to boost the world's fourth-largest economy with proactive spending.

Local media reports about Japan eyeing an economic stimulus package worth 10 trillion yen ($66.32 billion) also weighed on investor sentiment, Inadome said.

The 30-year JGB yield jumped to a record high of 3.345% early October after fiscal dove Sanae Takaichi became the leader of Japan's ruling party.

The yield eased after she subsequently became the country's first female prime minister as the market was relieved that Takaichi's spending plans were seen to be within expectations.

The spread in yields between the 10-year and 30-year bonds narrowed the most in five months last week to 137 bps from a record 170 bps in early September.

The 40-year JGB yield rose 1.5 bps to 3.415%. ($1 = 150.7800 yen) (Reporting by Junko Fujita; Editing by Harikrishnan Nair)