Japanese government bonds track rally in Treasuries as oil prices retreat

TOKYO, Aug 26 (Reuters) - Japanese government bond (JGB) yields retreated on Wednesday, following a rally in U.S. Treasuries on signs of de-escalation in the Middle East crisis.

Here are a few details:

• The benchmark 10-year JGB yield JP10YTN=JBTC dropped 2.5 basis points (bps) to 2.865%. Yields move inversely to bond prices.
• Longer-dated Treasury yields fell overnight as oil prices dropped to a one-week low. Crude continued its decline on Wednesday after Iran said it had resumed talks with neighbour Oman on managing the Strait of Hormuz waterway.
• "Given that concerns over escalating tensions in the Middle East and the resulting inflation fears had been the main drivers of the government bond market recently, a certain degree of buying is likely to emerge as these concerns subside," Keisuke Tsuruta, a senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities, said in a note.
• The two-year yield JP2YTN=JBTC, the one most sensitive to Bank of Japan policy rates, eased 0.5 bp to 1.670%. The five-year yield JP5YTN=JBTC slid 1 bp to 2.130%.
• Before the highly anticipated meeting of central bankers in Jackson Hole this week, the BOJ said board member Naoki Tamura will attend the gathering on behalf of Governor Kazuo Ueda.
• Data on Wednesday showed a key gauge of Japan's service-sector inflation rose 3.6% in July from a year earlier, adding signs of inflationary pressure that have bolstered the case for a near-term interest rate hike.