TOKYO, Feb 15 (Reuters) - Japanese government bonds mostly edged down on Wednesday, taking their cue from weaker U.S. Treasuries after the U.S. Federal Reserve chair took a more hawkish tone than many investors had expected.
The benchmark 10-year JGB yield rose 0.5 basis point (bp) to 0.095 percent, while 10-year JGB futures were flat at 149.86 at the end of morning trade.
U.S. Treasury yields jumped on Tuesday after Fed Chair Janet Yellen said it would be unwise to wait too long to raise interest rates.
The Bank of Japan offered on Wednesday to purchase 400 billion yen ($3.50 billion) of one- to three-year JGBs, 420 billion yen of three- to five-year JGBs, and 450 billion yen of five- to 10-year JGBs in its bond buying operations.
Last week, the BOJ increased its buying in the superlong zone, for only the second time in that sector since September, in response to rising yields.
The 20-year yield added 1 bp to 0.705 percent on Wednesday, while the 30-year JGB yield rose 1 bp to 0.900 percent, both below their respective one-year highs of 0.730 percent and 0.915 percent hit earlier this month.
“Market moves are very small today, and the market has returned to what has been normal in recent months,” said a fixed-income fund manager at a European asset management firm in Tokyo.
Investors had been pondering how far the BOJ would go to attain its stated aims since last September, when the central bank adopted its “yield curve control” policy under which it pledged to keep the 10-year yield around zero percent.
The curve steepened slightly as the two-year yield fell 0.5 bp to minus 0.230 percent, while the five-year yield was flat at minus 0.095 percent. Shorter maturities have remained firm, thanks to steady demand from foreign investors and a scarcity of supply.
On Tuesday, the BOJ lent a record amount of five-year JGBs at its regular operation, having induced a severe shortage that has crimped activity in the debt market.
According to BOJ data, the central bank held about 60 percent of the current issues of five-year JGBs as of the end of January. ($1 = 114.3300 yen) (Reporting by Tokyo markets team; Editing by Eric Meijer)