Japan bonds rise ahead of year's first super-long debt auction

By Rocky Swift

TOKYO, Jan 8 (Reuters) - Japanese government bonds (JGBs) rose on Thursday ahead of the first auction of super-long-term debt this year.

The 30-year JGB yield JP30YTN=JBTC fell 1 basis point (bp) to 3.490%. The benchmark 10-year JGB yield JP10YTN=JBTC slipped 3 bps to 2.090%.

The Ministry of Finance is set to sell about 700 billion yen ($4.47 billion) in 30-year JGBs later in the session, following moderately firm demand at a 10-year bond sale on Monday.

Long-term yields have risen sharply since early November, reaching successive record highs, on concerns over the scale of Prime Minister Sanae Takaichi's spending plans.

Short-term yields have faced upward pressure as the Bank of Japan raised policy rates and signalled more hikes were on the way.

Addressing worries in the market, the government decided to curtail issuance of super-long-term debt next fiscal year to the least in 17 years.

"Uncertainty around supply–demand factors in the super-long sector has subsided," Barclays analysts Ayao Ehara and Shinichiro Kadota wrote in a note.

"The current JGB 30-year term premium remains elevated by about 10 bp, which supports a benign auction outcome."

The two-year JGB yield JP2YTN=JBTC fell 2.5 bps to 1.14%. The five-year yield JP5YTN=JBTC slipped 3 bps to 1.550%.

($1 = 156.7700 yen)