(Updates with futures closing price, analyst quote)
TOKYO, April 13 (Reuters) - The benchmark 10-year Japanese government bond yield edged higher on Thursday after plumbing its lowest level since November and coming within a whisker of zero.
For the most part of the session, JGBs took cues from lower U.S. Treasury yields and were underpinned by solid demand at a 30-year JGB auction.
The benchmark 10-year JGB yield fell one basis point to 0.005 percent, but was one basis point higher at 0.025 percent in late afternoon trade.
The Bank of Japan, in its yield curve control policy, pledged to guide the 10-year JGB to around zero percent.
“Some people bought on momentum, when the curve flattened” after the 30-year sale, said Naomi Muguruma, senior strategist at Mitsubishi UFJ Morgan Stanley Securities.
“We all know that the BOJ’s target is around zero, so the consensus view is that they would probably taper once the 10-year yield hit that level. So there was some profit-taking,” she said.
The outlook for JGBs also depends on the situation in North Korea, she said, with safe-haven buying expected to underpin demand on any escalations.
North Korea may have the capacity to deliver missiles equipped with sarin nerve gas, Japanese Prime Minister Shinzo Abe said on Thursday, amid concerns that the reclusive state could soon conduct its sixth nuclear test or more missile launches.
While 10-year JGB futures rose to a session high of 151.15 in afternoon trade, their highest since November, before paring gains as cash bonds sold off and finished only 0.01 point higher at 150.91.
The U.S. benchmark Treasury yield approached five-month lows on Wednesday, prompted by U.S. President Donald Trump’s comments on favouring low interest rates. It continued to slip in Asian trading, and last stood at 2.242 percent, down from the U.S. close of 2.296 percent. It touched 2.221 percent earlier, the lowest since November.
On Thursday, Japan’s Ministry of Finance offered 800 billion yen ($7.35 billion) of 30-year JGBs with a 0.8 percent coupon, and 98.5832 percent of the bids accepted at the lowest price of 100.05.
The sale drew bids 3.08 times the amount offered, down from the previous sale’s bid-to-cover ratio of 3.14 times.
However, the tail - the gap between the average and lowest accepted prices - narrowed to 0.07, compared with that of last month’s offering at 0.19, indicating stronger demand for the bonds.
The outcome bolstered the super-long tenor, with 30-year yield slipping 4 basis points to 0.770 percent, its lowest since late January. In late trading, it stood at 0.790 percent, down 2 basis points.
The 20-year yield fell half a basis points to 0.580 percent after falling to 0.550 percent earlier, its lowest since December.
The five-year yield dropped one basis point to minus 0.175 percent, its lowest since November, but was last flat at minus 0.165 percent. ($1 = 108.8000 yen) (Reporting by Tokyo markets team; Editing by Sam Holmes and Vyas Mohan)