The 10-year yield JP10YTN=JBTC added 3 basis points to 2.97% in morning trading, the highest since September 1996 and creeping closer to the psychologically significant 3% level. Yields rise when bond prices fall.
The 5-year yield JP5YTN=JBTC rose 3 bps to a record 2.235%, while the 2-year yield JP2YTN=JBTC rose 2.5 bps to 1.77%, the highest since April 1995.
The 20-year yield JP20YTN=JBTC rose 2 bps to 3.845%. The 30-year JGB had not traded as of 0104 GMT.
Benchmark 10-year JGB futures 2JGBv1 declined 0.37 yen to 125.60 yen.
Auction and rate-hike expectations weigh on the market
The Ministry of Finance will auction about 2.6 trillion yen ($16.3 billion) of 10-year notes, with the results due at 0335 GMT.
"A 10-year yield knocking on 3% for the first time in three decades, with a coupon reset to match, is real income rather than a trading chip. But there is a difference between levels that are buyable and levels that are compelling," said Shoki Omori, chief fixed income strategist for Japan at Deutsche Bank, adding the tender was likely "to be absorbed rather than embraced."
Investors are cautious amid growing expectations of interest rate hikes by both the Bank of Japan and the U.S. Federal Reserve, which would put further upward pressure on yields.
Inflation risks are also simmering as Middle East uncertainty keeps crude oil prices elevated.
Traders are also eyeing budget requests from Japan's ministries for next fiscal year, amid reports that the total will climb to a record high.
($1 = 159.7400 yen)
10-year JGB yield hits 30-year high before auction
TOKYO, Sept. 1 (Reuters) - The yield on benchmark 10-year Japanese government bonds rose to a 30-year high on Tuesday, pulled higher by an overnight climb in U.S. Treasury yields and ahead of a closely watched auction of the Japanese notes later in the day.
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