By Kevin Buckland and Brigid Riley
TOKYO Japanese government bond yields fell from multi-month highs on Monday, mirroring a sharp retreat in their U.S. peers at the end of last week after data showed U.S. jobs growth had cooled.
The 30-year JGB yield fell 2 basis points (bps) to 1.595%, after reaching 1.63% in the previous session for the first time since mid-January. The Finance Ministry's auction of about 900 billion yen ($6.33 billion) of the tenor on Tuesday will be closely watched as a litmus test of demand in the sector.
The 20-year yield declined 1.5 bps to 1.32%. It hit 1.355% on Friday, a level last seen at the start of February.
The 10-year JGB yield slid 2 bps to 0.62%. On Thursday it had risen to the highest since January 2014 at 0.655% as the market continued to seek an equilibrium level between the Bank of Japan's official policy ceiling of 0.5% under yield curve control (YCC) and the new de-facto limit at 1% following last month's surprise policy tweak.
Minutes of that meeting released in the Tokyo morning offered little in the way of fresh clues for traders.
Equivalent U.S. Treasury yields were little changed at around 4.06% in Tokyo trading after plunging some 14 bps on Friday from a nine-month high above 4.2% reached earlier that session.
Investors are closely monitoring how the Bank of Japan conducts its bond-purchase operations for hints on a comfortable level for the 10-year yield.
The central bank's focus thus far on buying of maturities up to 10 years may buff the attractiveness of the 30-year bonds at Tuesday's auction, said Takafumi Yamawaki, head of Japan fixed-income research at J.P. Morgan Securities.
"The BOJ has not shown the intention to control superlong yields," Yamawaki said, adding that on an absolute basis, "life insurers think the 30-year JGB yield at this moment is quite attractive."
At the shorter end on Monday, two-year JGB yield fell 0.5 bp to 0.015%, while the five-year yield declined 1 bp to 0.20%.
Benchmark 10-year JGB futures closed 0.24 yen higher at 146.60, rebounding from Friday's nearly five-month low of 146.24.
($1 = 142.0800 yen)
(Reporting by Kevin Buckland and Brigid Riley; Editing by Nivedita Bhattacharjee)