JGB futures slipped in early Tokyo trading as yen weakness added to inflation concerns, while investors watched a Finance Ministry auction of about 2.8 trillion yen in two-year notes.
Japanese government bonds remained under pressure in early Tokyo trading, with benchmark 10-year JGB futures down 0.08 yen at 127.96 as yen weakness added to inflation concerns already fueled by higher crude prices. A weaker yen tends to raise import costs in Japan, potentially reinforcing price pressures and supporting the case for further BOJ rate increases. Investors were also watching the Japanese Finance Ministry’s auction of about 2.8 trillion yen in two-year sovereign notes. SMBC Nikko Securities’ Lisa Mochizuki said in a research report that the two-year sale should clear smoothly and that two-year yields look fair. Earlier in the session, the 10-year JGB yield rose 3.5 basis points to 2.630% and the 20-year yield climbed 3.5 basis points to 3.545%, with JPMorgan Global Markets Strategy analysts also citing fiscal expansion and persistent supply pressure in the JGB market.