November 30, 2016 / 6:40 AM / a year ago

JGBs edge down slightly; 10-year sale awaited

TOKYO, Nov 30 (Reuters) - Japanese government bonds edged down on Wednesday as investors positioned for the next session’s 10-year sale.

The 10-year yield rose 1 basis point (bp) to 0.020 percent , though it remained shy of a nine-month high of 0.045 percent struck on Friday.

December 10-year JGB futures ended down 0.07 point at 150.56.

The 20-year yield and the 30-year yield both climbed 1 bp to 0.450 percent and 0.570 percent, respectively.

November JGB trading was marked by upward pressure on yields, tracking U.S. Treasuries, whose prices dropped to multi-month lows after the U.S. election on Nov. 8. Investors sold U.S. debt on the expectation that U.S. President-elect Donald Trump’s administration will boost fiscal spending and stoke inflation.

The impact on JGBs was blunted by the Bank of Japan’s monetary policy. Under its framework outlined in September, the central bank controls the JGB yield curve control and guides the benchmark 10-year yield to around zero percent.

“JGBs at least tried to follow outside markets, but we are now under the BOJ’s yield curve control,” said Keiko Onogi, senior strategist, Daiwa Securities.

“As long as the BOJ keeps its current monetary policy, I expect the 10-year JGB yield will stay around zero,” she added.

The JGB market shrugged off data released early on Tuesday which showed that Japan’s industrial output rose in October from the previous month. Manufacturers said production likely bounced sharply this month, in a sign of a tentative pickup in factory activity. (Reporting by Tokyo markets team; Editing by Sherry Jacob-Phillips)

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