Longer-dated JGB yields jump despite firm auction outcome

TOKYO, April 22 (Reuters) - Yields on longer-dated Japanese government bonds (JGBs) jumped on Tuesday, even as an auction for bonds with such maturities saw a strong outcome.

The 20-year JGB yield JP20YTN=JBTC rose 4 basis points (bps) to 2.315% and the 30-year yield JP30YTN=JBTC rose 4 bps to 2.785%.

Japan's finance ministry held a liquidity-enhancing auction for bonds with maturities between 15.5 years and 39 years earlier in the day.

It attracted firm demand, defying market worries following a heavy sell-off of JGBs that lifted the 30-year yield to a 21-year high earlier this month.

Yields on shorter dated bonds also rose, with the five-year yield JP5YTN=JBTC up 3 bps to 0.87%.

"Some investors are buying back shorter-dated bonds as bets for the Bank of Japan's (BOJ) early interest rate hike has weakened," said Miki Den, a senior Japan rate strategist at SMBC Nikko Securities.

"That limited the rises of the yields on those bonds. But the market is still bracing for an interest rate hike at some point," Den said.

The BOJ is expected to signal next week that risks from higher U.S. tariffs will not derail a cycle of rising wages and inflation seen as crucial to keep raising interest rates.

The assessment, to be included in its quarterly outlook report due on May 1, will underscore the BOJ's desire to keep alive market expectations of further rate hikes - even though the timing of its next move could be months away.

The two-year JGB yield JP2YTN=JBTC and the 10-year yield JP10YTN=JBTC rose 2.5 bps each, to 0.665% and 1.31%, respectively.