Japan yields rise in line with global markets as demand ebbs; Fed decision in focus

·1 min read

By Kevin Buckland

TOKYO, March 22 (Reuters) - Japanese government bond yields rose on Wednesday tracking a global rebound in yields from multi-month lows, as easing concerns about a banking meltdown weighed on appetite for safe-haven assets.

Japan's five-year yield bounced from a four-month trough hit on Monday, while 10-year JGB futures were on course for their steepest decline since mid-January. Japanese markets were closed on Tuesday for a public holiday.

Trading was thin, however, with a crucial U.S. Federal Reserve interest rate decision due later in the day. Many benchmark cash bonds had yet to change hands as of 0515 GMT, including the 10-year note.

Money markets are again positioned for a quarter-point rate hike by the Fed, after trimming those expectations to closer to a coin toss earlier in the week.

"For the time being, worries about the tail risk for a full-blown financial crisis have receded," Noriatsu Tanji, chief bond strategist at Mizuho Securities, wrote in a note.

Benchmark 10-year JGB futures were down 0.72 point at 148.27 as of 0530 GMT, set for their steepest decline since Jan. 13.

The five-year JGB yield added 3 basis points (bps) to 0.09%, while the 20-year yield rose 7.5 bps to 1.06% and the 40-year yield rose 7 bps to 1.53%.

Like the benchmark 10-year JGB, the two-year note and 30-year bond had yet to trade. They last yielded 0.23%, -0.08% and 1.23%, respectively. (Reporting by Kevin Buckland; Editing by Rashmi Aich)