Japan bond yields dip as investors await Fed decision

TOKYO, July 29 (Reuters) - Japanese government bond (JGB) yields mostly fell on Wednesday, tracking a decline in U.S. Treasury yields overnight as investors awaited the Federal Reserve's policy decision and weighed Middle East risks for oil prices and inflation.

Here are a few details:

• The benchmark 10-year JGB yield JP10YTN=JBTC fell 1.5 basis points (bps) to 2.760%. Yields move inversely to bond prices.
• "AI- and semiconductor-related shares continued to fall in overseas markets yesterday. If risk-off sentiment intensifies today, pressure for a twist steepening of the JGB yield curve is likely to build, as it did yesterday," Keisuke Tsuruta, senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities, said in a note.
• U.S. Treasury yields fell overnight as oil prices continued to ease on hopes for a lasting resolution to the U.S.-Iran conflict. US/
• Traders were also awaiting the Fed's interest rate decision on Wednesday, with markets pricing in a 33% chance of a 25-basis-point hike. 0#USDIRPR
• The U.S. military said on Tuesday it intercepted multiple ballistic missiles launched by Iran towards U.S. forces in the Middle East. Oil prices rose more than $2 a barrel on Wednesday on shrinking U.S. crude inventories. O/R
• The two-year yield JP2YTN=JBTC, the most sensitive to Bank of Japan policy rates, fell 2.5 bps to 1.465%. The five-year yield JP5YTN=JBTC fell 2.5 bps to 1.980%.
• Among longer-dated maturities, the 20-year JGB yield JP20YTN=JBTC slid 1 bp to 3.655%. The 30-year yield JP30YTN=JBTC sank 0.5 bp to 3.975%. The yield on the 40-year JGB JP40YTN=JBTC, Japan's longest tenor, rose 0.5 bp to 4.035%.
• The BOJ will hold a two-day policy meeting from Thursday. The central bank is expected to keep interest rates steady but leave scope for further hikes through hawkish communication, while likely remaining ambiguous on the pace and timing of future increases.