TOKYO Dec 10 Japanese government bond prices edged higher on Tuesday, with the longer-dated sectors underperforming ahead of an auction of 30-year debt later in the day.
The Ministry of Finance was to sell 600 billion yen ($5.8 billion) worth of 30-year JGBs on Tuesday.
Yields on existing 30-year JGBs rose 1.5 basis points to 1.685 percent, while the 20-year yield was up 2 basis points at 1.520 percent.
"Thirty-year yields have exceeded 1.65 percent, their highest level at auction time since September. Given the trend of the past several months, this should be an adequate level for dip-buying," Barclays Capital said in a note.
But analysts from Morgan Stanley MUFG said they continued to recommend going short the 30-year sector, saying it expected the long-end of the yield curve to face steepening pressure as the Bank of Japan's efforts to achieve a 2 percent inflation target push up forward long-term rates.
The BOJ stunned the financial markets on April 4, promising to inject $1.4 trillion into the world's third-largest economy in less than two years.
The 10-year JGB yield added 1 basis point to 0.665 percent. So far this year, the benchmark yield has fallen 13 basis points, heading for a fourth straight year of decline.
Ten-year JGB futures dipped 4 ticks to 144.67.
The five-year yield inched up 0.5 basis point to 0.195 percent, though not too far from a 7-1/2-month low of 0.180 touched late last month.
Earlier, a government survey showed large Japanese manufacturers grew less optimistic about business conditions in October-December, in a sign that domestic demand may be faltering.