Japan government bonds hold steady ahead of debt auction, BOJ remarks

By Rocky Swift

TOKYO, Sept 2 (Reuters) - Japanese government bonds held steady on Tuesday ahead of a 10-year debt auction and comments from Bank of Japan (BOJ) Deputy Governor Ryozo Himino.

Benchmark 10-year JGB futures 2JGBv1 rose 0.02 yen to 137.32. Most cash bonds had yet to trade in the morning session.

Japan's Ministry of Finance will auction around 2.6 trillion yen ($17.65 billion) of 10-year notes.

BOJ's Himino is set to speak in the morning and afternoon, with markets closely watching for any signs on when the central bank may resume interest rate hikes.

Traders currently are pricing in a 46% chance of a quarter-point increase by the end of October.

Separately, on Thursday, the ministry will auction around 700 billion yen of 30-year bonds, a tenor under close scrutiny after a series of record highs last month.

Longer-dated JGB yields have risen to historic highs of late due to concerns about the government's debt pile and deficit spending.

Selling intensified after an electoral drubbing last month for the political coalition of fiscal hawk Prime Minister Shigeru Ishiba, leading to speculation that he will be forced to step down.

Government spending requests will likely set a record for the third consecutive year, a draft of the requests obtained by Reuters showed on Monday.

The benchmark 10-year yield JP10YTN=JBTC stood at 1.62%, just shy of the 17-year high of 1.63% touched last week.

The 30-year JGB yield JP30YTN=JBTC rose 1 basis point to 3.2%. It reached an all-time high of 3.235% on Wednesday.

BOJ's JGB holdings by tenor https://tmsnrt.rs/45vXZ50