TOKYO, Sept 5 (Reuters) - Japanese government bonds (JGB) yields rose on Tuesday as a highly anticipated 10-year JGB auction produced weak results.
The 10-year JGB yield rose 1 basis point (bp) to 0.65%, having hit a one-week high of 0.655% earlier.
"The auction results reaffirmed the poor demand for 10-year JGBs (with yields at the mid-0.6% range)," said Ryutaro Kimura, fixed income strategist at AXA Investment Managers.
As anticipation builds that the Bank of Japan (BOJ) may shift their ultra-loose monetary policy sometime in the first half of next year, the 10-year JGB is "not attractive," he said.
The BOJ tweaked its yield curve control policy in July to allow the 10-year yield to move as high as 1%, although it has used emergency buying operations several times since then to nip short, sharp rises.
"I believe the market in general thinks the 10-year yield is where it should be and it probably won't be going up much further without any action by the policymakers," said Bart Wakabayashi, manager at State Street in Tokyo.
The Ministry of Finance said the yield for the lowest accepted price at the day's auction was 0.668%, while the yield at the average price was 0.657%. The ministry sold about 2,172 billion yen ($14.81 billion) of the bond.
A 30-year JGB auction will be conducted on Thursday, followed by a scheduled "rinban" operation on Friday.
"We have to see whether follow-through buying will come in later today or otherwise people will fear the 30-year coming out weak too," said Shoki Omori, chief desk strategist at Mizuho Securities in Japan.
The 20-year JGB yield rose 1 bp to 1.37%.
The 30-year JGB yield was flat at 1.65%.
The two-year JGB yield inched up 0.5 bp to 0.02%, and the five-year yield sat 1 bp higher at 0.225%. ($1 = 146.6600 yen) (Reporting by Brigid Riley and Kevin Buckland; Editing by Savio D'Souza)
