JGB yields pulled higher by jump in Treasury yields; BOJ impact limited

TOKYO, Jan 18 (Reuters) - Japanese government bond yields edged higher on Tuesday, lifted by a rise in U.S. Treasury yields to a one-year high.

The 10-year JGB yield added 0.5 basis point to 0.145%, while the 20-year JGB yield rose by the same amount to 0.535%.

Benchmark 10-year JGB futures fell 0.09 point to 150.74, with a trading volume of 29,086 lots.

The 10-year Treasury yield jumped as high as 1.8550% in Tokyo trading for the first time since mid-January 2020 as traders braced for the possibility of a hawkish surprise from the Federal Reserve, with policymakers meeting next week. The Treasury market was closed on Monday for a holiday.

Meanwhile, the Bank of Japan on Tuesday left unchanged its yield curve control settings, as widely expected, even as it slightly upgraded its inflation forecasts.

"The bond market reaction to the BOJ policy meeting was limited, but several minutes later the market sold off in tandem with the stock market and yen under pressure from the rise in U.S. yields," said Katsutoshi Inadome, senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities.

In most other JGB tenors though, yields ended flat, with the two-year yield unchanged at minus 0.075%, the five-year yield at minus 0.025%, and the 30-year yield at 0.710%. (Reporting by Tokyo markets team; editing by Uttaresh.V)

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