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Longer-dated JGBs track U.S. yields lower ahead of Fed meeting

·1-min read

TOKYO, July 28 (Reuters) - Longer-dated Japanese government bond yields fell on Wednesday, tracking U.S. Treasury yields, but declines were limited as investors were cautious ahead of the Federal Reserve's monetary policy decision.

The 10-year JGB yield fell 0.5 basis point to 0.010%, after comparable-maturity Treasury yields slid in excess of 5 basis points overnight to 1.2394%.

The 20-year JGB yield slipped 0.5 basis point to 0.395%, while the 30-year yield declined 1 basis point to 0.640% and that on the 40-year debt dropped 1 basis point to 0.730%.

Investors will be looking for any hints on when the Fed will start tapering its stimulus, especially with the risks to growth from the Delta variant of the coronavirus escalating since the previous policy meeting in mid-June.

The statement from the Fed policy meeting is due at 2 p.m. EDT (1800 GMT), with a news conference by Chairman Jerome Powell expected a half hour later.

"Yesterday's auction of 40-year JGBs was on the strong side, and concerns are not so strong that yields have fallen too far," said a market participant at a domestic securities firm.

"While the scope for yields to fall is limited in medium-term JGBs, super-long bond yields are reacting to the decline in overseas bond yields overnight."

The five-year JGB yield was flat at minus 0.130%, while two-year notes ended the session untraded.

Benchmark 10-year JGB futures rose 0.06 point to 152.35, with a trading volume of 17,156 lots.

(Reporting by Tokyo markets team; Editing by Amy Caren Daniel)

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