Japanese bonds track declines for US peers ahead of payrolls report

By Kevin Buckland

TOKYO, Jan 9 (Reuters) - Most Japanese government bonds fell on Friday, pushing yields higher, as they tracked overnight declines for U.S. Treasuries ahead of eagerly anticipated U.S. payroll data later in the day.

The 10-year JGB yield JP10YTN=JBTC added 1.5 basis points (bps) to 2.09%, and are on track to have risen 3 bps this week.

Benchmark 10-year JGB futures 2JGBv1 fell 0.2 yen to 132.47 yen. Bond prices move inversely to yields.

Yields have been on an upward trajectory for the past two months, amid a combination of rising expectations for Bank of Japan interest rate hikes, lowering expectations for Federal Reserve rate cuts, and worries about fiscal spending under Japan's new premier.

At the start of November, the 10-year yield stood around 1.65%.

"The upward trend in JGB yields is expected to persist, with the 10-year having clearly exceeded 2% and seeking a new equilibrium," Shoki Omori, chief desk strategist at Mizuho Securities, wrote in a research note.

"While dip-buying may emerge near 2.1%, it is unlikely to reverse the trend."

Friday's U.S. jobs data should offer a cleaner picture on the state of the labor market after the last few months were clouded by delays and incomplete data collection as a result of the longest federal government shutdown in history.

Fed policymakers are balancing a weakening labor market against concerns about still-elevated inflation.