TOKYO, July 20 (Reuters) - Japanese government bond yields declined on Thursday as traders continued to pare back bets for a hawkish tweak to Bank of Japan policy next week, while a decline in U.S. yields overnight added additional pressure.
The 10-year JGB yield fell 0.5 basis point (bp) to 0.455%, the lowest since July 12.
Benchmark 10-year JGB futures rose 0.11 yen to 147.92 after earlier reaching an almost two-week high of 147.97.
Superlong yields declined by a wider margin, with the 30-year dropping 3 bps to 1.355% and the 20-year JGB yield falling 2 bps to 1.085%.
The five-year yield edged down 0.5 bp to 0.105%. The two-year note had yet to trade as of 0550 GMT. The 10-year yield has dropped this week from a more than four-month peak of 0.485% - just 1.5 bps below the central bank's 0.5% policy ceiling under yield curve control (YCC) - after BOJ Governor Kazuo Ueda said on Tuesday there was still some distance to sustainably and stably achieve the central bank's 2% inflation target.
Speculation that strong wage growth and consistently high inflation would force a raising of that ceiling at the BOJ meeting ending July 28 had spurred an 8.5 bps surge in the benchmark yield in the space of a week.
Despite the sharp decline in yields, there remains a split in the market on the odds of a hawkish tweak next week, both among investors and analysts.
"If speculation about a July policy revision had really disappeared, the 10-year yield would have easily fallen to the low 0.4% level," said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management.
"In order to judge whether the BOJ really intends to extinguish that speculation, we should pay close attention to what BOJ officials say over the next few days." (Reporting by Kevin Buckland, additional reporting by Tomo Uetake; Editing by Sonia Cheema)
