TOKYO, Jan 20 (Reuters) - Japanese government bond yields edged higher on Thursday, led by longer-dated tenors, after U.S. Treasury and German bund yields extended gains overnight amid expectations the Federal Reserve would tighten monetary policy faster than previously expected.
The 10-year JGB yield rose 0.5 basis point to 0.140%, after similar-dated Treasury yields climbed to a fresh two-year high and Bund yields topped 0% for the first time since May 2019.
The Federal Open Market Committee meets next week, and traders are looking for any clues on the path for policy tightening with the central bank sounding increasingly hawkish in recent weeks.
Investors are fully pricing in an interest rate hike at the Fed's March meeting, and three more hikes this year.
Meanwhile, unease as the European Central Bank plans to end its pandemic emergency bond purchases in March has also put upward pressure on bond yields.
By contrast, the Bank of Japan (BOJ) recommitted to continued ultra-easy policy at a meeting this week.
"There's a sense of relief in the yen bond market with the BOJ meeting out of the way, and the sense that JGBs were relatively cheap compared with Treasuries has dissipated," said Ataru Okumura, a rates strategist at SMBC Nikko Securities.
"Until we can say that U.S. yields have peaked, this will be a time when it's easy for Japanese investors to shift to Treasuries."
Benchmark 10-year JGB futures fell 0.08 point to 150.84, with a trading volume of 20,776 lots.
Longer-dated bond yields rose more, steepening the yield curve.
The 20-year and 30-year yields each rose 1 basis point to 0.535% and 0.715%, respectively.
The two-year yield was flat at minus 0.080%, while the five-year yield rose 0.5 basis point to minus 0.035%. (Reporting by Tokyo markets team; Editing by Subhranshu Sahu)
