JGB yields rise on US Treasury moves, BOJ hike speculation

By Satoshi Sugiyama

TOKYO, June 23 (Reuters) - Japanese government bond (JGB) yields edged higher on Tuesday, in line with overnight moves in U.S. Treasuries, amid speculation that the Bank of Japan may accelerate the pace of rate hikes to address yen weakness.

Here are a few details:

* The two-year yield, the one most sensitive to Bank of Japan policy rates, increased 0.5 basis points (bps) to 1.41%. The five-year yield rose 0.5 bps to 1.91%. Yields move inversely to bond prices.

* The benchmark 10-year JGB yield was flat after rising 1 bp to 2.680% earlier in the session.

* Japanese Finance Minister Satsuki Katayama held an online meeting with U.S. Treasury Secretary Scott Bessent late on Monday. The meeting focused on policy responses to the historically weak yen, potentially including currency intervention, Japanese broadcaster TBS reported earlier in the day, citing people familiar with the matter.

* "Given Bessent's track record of helping create the conditions for BOJ rate hikes, the meeting could prompt bond market speculation that the BOJ may accelerate the pace of rate increases to stem yen weakness," Keisuke Tsuruta, senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities, said in a note.

* Overnight, U.S. Treasury yields rose as traders positioned for a more hawkish Federal Reserve and the prospect of rate hikes later this year, with interest-rate-sensitive 2-year yields touching a 16-month high.

* The finance ministry is set to auction about 2.5 trillion yen ($15.47 billion) of 5-year maturities later in the day.

* "With the dollar climbing into the mid-161 yen range, it is entirely possible that the BOJ could send a more hawkish message, such as signalling a faster pace of rate hikes. In that case, medium-term bonds would likely come under upward pressure on yields," said Lisa Mochizuki, analyst, SMBC Nikko Securities.

* "For the time being, there is likely to be little to support buying, and we expect a weak auction result this time," she said.

($1 = 161.5900 yen) (Reporting by Satoshi Sugiyama; Editing by Sherry Jacob-Phillips)