Short-term JGB yields set for weekly gain as bets solidify for BOJ rate hike

By Rocky Swift

TOKYO, June 5 (Reuters) - Japanese government bonds (JGBs) held steady on Friday, while short-term yields were poised for a weekly advance as market bets solidified around policy tightening by the central bank.

Here are a few details:

* The benchmark 10-year JGB yield fell 1 basis point (bp) to 2.660%. Yields move inversely to bond prices.

* The two-year yield, the one most sensitive to Bank of Japan policy rates, eased 1 bp to 1.405%, still poised for a 4-bp rise for the week. The five-year yield slid 1 bp to 1.920%.

* A speech by Bank of Japan Governor Kazuo Ueda on Wednesday indicated he was ready to raise the bank's key interest rate, with markets now reflecting an 80% probability of a hike at the June 15-16 policy meeting.

* Recent remarks from BOJ officials highlighted the risk that energy shocks caused by the Iran war could become persistent through wages and expectations.

* "A rate hike at the June meeting is now largely priced in," Sony Financial Group senior economist Takayuki Miyajima said in a note. "Market attention has shifted to the pace of future rate hikes, and uncertainty surrounding monetary policy is perceived as a source of upward pressure on long-term interest rates."

* Japan's real wages climbed 1.9% year-on-year in April, data showed on Friday, marking a fourth consecutive monthly gain.

* Over the past month, JGB yields have surged to multi-decade highs on inflation worries and fiscal concerns.

* The yield on the 20-year JGB held steady at 3.575%. The yield on the 30-year JGB added 1 bp to 3.890%, marking its third consecutive daily gain. The yield on the 40-year JGB, Japan's longest tenor, was unchanged at 3.750%.