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JGB yields rise after Tokyo consumer inflation spike

SINGAPORE, Nov 25 (Reuters) - Japanese government bonds (JGB) yields rose on Friday, with yields on super-long bonds at nearly two-week highs after data showed consumer inflation in the capital city of Tokyo soared in November at its fastest annual pace since April 1982.

The 20-year JGB yield rose 3 basis points to 1.09%, while the 30-year JGB yield rose 3 basis points to 1.475%. Their highest levels since Nov. 15.

The 10-year JGB yield rose 0.5 basis points to 0.25%, the top end of the Bank of Japan's policy band ceiling.

The Tokyo core consumer price index (CPI), which excludes fresh food but includes fuel, was 3.6% higher in November than a year earlier, government data showed on Friday, raising the chance of further increases in nationwide core consumer prices, which are already at 40-year highs.

"It's kind of obvious now that the CPI will go over 2% this year and could stay above that level next year, and the BOJ has been missing its forecasts on the upside for a while," said Naka Matsuzawa, chief Japan macro strategist at Nomura in Tokyo

"Investors are quite confident now that the BOJ has to move at some point relatively soon, so they are placing bets on that, buying bank shares and selling JGBs again, that kind of thing," he said, referring to the BOJ's ultra-loose yield-curve control policy.

Inflation is negative for bond investors because it erodes the value of fixed returns.

The five-year yield rose 2 basis points to 0.095%.

Benchmark 10-year JGB futures fell 41 yen to 148.97, with a trading volume of 16,046 lots.

The 40-year JGB yield had not traded ahead of an auction for notes of the same maturity, with traders anticipating heavy bids due to strong appetite among banks and pension funds for longer-dated assets.

The moves in JGBs were in contrast to U.S. Treasuries, with the 10-year yield dipping to 3.659%, the lowest since Oct. 5, after Thursday's U.S. Thanksgiving holiday as investors assessed dovish cues from the Federal Reserve. (Reporting by Ankur Banerjee in Singapore and Kevin Buckland in Tokyo; Editing by Savio D'Souza)