JGB yields edge up amid divided view on fiscal expansion, BOJ rate hike

By Junko Fujita

TOKYO, Feb 18 (Reuters) - Japanese government bond (JGB) yields edged up on Wednesday, as prospects for Japan's fiscal condition and the central bank's rate-hike path remained divided among investors.

The 20-year JGB yield JP20YTN=JBTC fell 0.5 basis point (bp) to 2.965%. The 30-year yield JP30YTN=JBTC inched up 0.5 bp to 3.390%.

"The market view on Japan's fiscal condition is divided. Some see the spending would expand, and some do not," said Miki Den, a senior Japan rate strategist at SMBC Nikko Securities.

"And the yields move on those conflicted speculations," he added.

Yields on super-long date bonds hit record highs last month as concerns grew about increasing government spending, as the Prime Minister pledged to suspend taxes on food for two years, and called for a snap election.

But yields declined after Sanae Takaichi's Liberal Democratic Party's landslide win in this month's election.

Both the 20-year and 30-year bond yields hover at their lowest level this week since the end of December.

Bets on the Bank of Japan's tightening weakened in the latest sessions as the yen held its momentum against the U.S. dollar after falling close to the psychologically important 160 mark in January.

On Wednesday, the Bank of Japan's earlier bond-buying operation had a weak outcome, hurting sentiment in the five- to 10-year bond sector.

The five-year yield JP5YTN=JBTC rose 0.5 bp to 1.62%. The 10-year JGB yield JP10YTN=JBTC rose 1 bp to 2.135%.

The two-year yield JP2YTN=JBTC rose 1 bp to 1.235%. The five-year yield JP5YTN=JBTC rose 0.5 bp to 1.62%.