TOKYO, May 13 (Reuters) - Japanese government bond
yields rose on Tuesday to their highest since U.S. President
Donald Trump's April 2 "Liberation Day," when he announced a
flurry of tariffs on U.S. trading partners.
U.S. Treasury yields rose on Monday after weekend talks
between U.S. and Chinese negotiators yielded a 90-day pause in
their tit-for-tat trade spat and sharply lowered the tariffs the
world's top two economies had imposed on each other.
Bank of Japan deputy governor Shinichi Uchida told
parliament on Tuesday that the central bank expects wages and
prices to keep rising, even as the uncertainty over U.S. tariff
policy weighs on the economy, keeping policymakers on course to
continue raising interest rates.
The 10-year JGB yield rose as much as 8 basis
points (bps) to 1.465%, while the five-year yield
advanced 9 bps to 1%, both highs since April 2.
Benchmark 10-year JGB futures fell as much as 0.96
yen to 139.08 yen, the lowest since April 2. Bond yields move
inversely to prices.
The two-year yield rose 6.5 bps to 0.72%, the
highest since April 3.
However, Mizuho Securities analysts said they doubt JGB
yields will stay at the current highs.
"The outcome of these discussions remains uncertain," said
Noriatsu Tanji, Mizuho's chief bond strategist, referring to the
U.S.-China trade truce.
"The recent rebound in the market, including in risk asset
prices, may be seen as somewhat excessive, occurring in low
liquidity conditions" that exacerbate price swings, he said.
Superlong JGB yields initially rose, before later reversing
direction.
The 30-year yield added 1 bp to reach a new
record high of 2.96%, but then sank 5 bps to 2.9%.
An auction of 30-year bonds saw weak demand, but such a
result had been widely expected, producing a limited reaction in
the market, analysts said.
The 20-year JGB yield rose as much as 1.5 bps
early in the session, but then declined in sympathy with the
30-year bond, and was last down 2.5 bps at 2.36%.
(Reporting by Kevin Buckland; Editing by Varun H K)