JGB yields fall on lower oil prices; 10-year auction awaited

Japanese government bond yields fell on Tuesday as lower oil prices, driven by hopes of a de-escalation in the Middle East conflict, eased inflation concerns and investors awaited the result of a 10-year debt auction later in the day.

Here are a few details:

• The benchmark 10-year JGB yield JP10YTN=JBTC fell 2 basis points (bps) to 2.800%. Yields move inversely to bond prices.
• The 20-year JGB yield JP20YTN=JBTC slid 1.5 bps to 3.670%. The 30-year yield JP30YTN=JBTC sank 1 bp to 3.970%.
• The two-year yield JP2YTN=JBTC, the most sensitive to Bank of Japan policy rates, decreased 1 bp to 1.55%. The five-year yield JP5YTN=JBTC fell 1 bp to 2.075%.
• U.S. Treasury yields declined overnight amid easing oil prices on hopes tensions between Washington and Tehran would ease, though traders remained alert to the prospect of a Federal Reserve rate hike if the war drags on.
• On Monday, JGB yields rose as some investors took joint intervention by the U.S. and Japan to support the yen as a signal for an accelerated pace of BOJ policy tightening.

Japan's finance ministry is set to auction about 2.6 trillion yen of 10-year maturities later in the day.

Analysts expect relatively weak auction results, citing growing but still uncertain prospects of faster BOJ rate hikes after the coordinated yen-buying intervention.