TOKYO, Nov 14 (Reuters) - Japanese government bonds fell
on Friday, pushing yields higher, as they tracked declines in
U.S. Treasuries overnight amid growing doubts about an imminent
Federal Reserve rate cut.
Longer-term Japanese yields rose more, steepening the yield
curve - a trend that has been in place all month as investors
fretted over the potential for less fiscal restraint under new
Prime Minister Sanae Takaichi.
The 30-year JGB yield advanced 2 basis points
(bps) to 3.21%, while the 20-year yield gained
1.5 bps to 2.71%.
The 10-year yield rose 1 bp to 1.7% and the
five-year yield added 0.5 bp to 1.245%. The
two-year yield was flat at 0.925%.
Takaichi said this week she would work on setting a new
fiscal target extending through several years to allow more
flexible spending, essentially watering down Japan's commitment
to fiscal consolidation.
She has also asked the Bank of Japan to go slow in raising
rates to align with her focus on fostering economic growth.
"In the super-long sector, Takaichi's fiscal policy measures
are already priced in term premia, to some extent, but
expectations for issuance cuts provide support in the near term
and the final scope of fiscal stimulus may open up further room
for a rise in yields," Barclays analysts wrote in a research
note.
Meanwhile, the 10-year Treasury yield edged up
slightly to 4.1173% on Friday after climbing 4.4 bps in the
previous session.
A growing number of Fed policymakers in recent days have
signaled hesitation on further easing, helping push financial
market-based odds of a reduction in borrowing costs in December
to near even.
Minutes of the Federal Open Market Committee's last meeting
are due for release on Wednesday of next week.