Japanese government bond yields rise ahead of auction, BOJ purchase operation

JGB yields rise: Japanese government bond (JGB) yields saw an uptick on Monday as investors adopted a cautious stance ahead of a key bond auction and the Bank of Japan's initial bond purchase operation for the new fiscal year.

The 10-year JGB yield climbed to a little over a one-week high of 0.745 per cent before an upcoming bond auction on Tuesday, marking a 1.5 basis point increase to 0.740 per cent.

Market attention is focused on the BOJ's first bond purchase of the fiscal year scheduled for Wednesday, with investors closely monitoring any adjustments to the offer amount. 

Analysts anticipate gradual adjustments by the central bank towards the lower end of its offer range for this period, potentially signalling a future reduction in monthly purchases.

BOJ Governor Kazuo Ueda affirmed the bank's intention to eventually scale back bond purchases, reflecting a shift in policy direction amid concerns over market liquidity and function.

The BOJ's outright purchase of JGBs for the previous fiscal year amounted to 87.5809 trillion yen, down from the record high of 135.989 trillion yen in the preceding year. 

Despite this, total purchases for March remained relatively stable at around six trillion yen, indicating a continued major presence in the bond market.

Yields for the 20-year and 30-year JGBs also saw increases, reaching two-week highs, while the five-year yield witnessed a slight uptick.

Overall, the market remains cautious amidst evolving monetary policy dynamics and the ongoing impact of the BOJ's bond purchasing activities.

(With Reuters Inputs)