TOKYO, July 18 (Reuters) - Yields on the longest-dated Japanese government bonds rose on Tuesday, with the benchmark 10-year yield hovering close to a four-month high as speculation continued to simmer about a potential hawkish tweak to the Bank of Japan's policy next week.
The 30-year JGB yield rose 1.5 basis points (bps) to 1.405%, after earlier touching 1.41% for the first time since March 10.
The 20-year yield rose 0.5 bp to 1.125%, approaching Friday's high of 1.13%, a level last seen on April 25. Japanese markets were closed on Monday for a holiday.
The 10-year yield, however, edged down 0.5 bp to 0.47%, after rising as high as 0.485% on Friday for the first time since March 10. The BOJ allows the yield to fluctuate up to 50 bps either side of its 0% target under the yield curve control policy (YCC).
Traders have pushed yields sharply higher since July 7, when a wage report came in much hotter than expected. A Nikkei interview with BOJ Deputy Governor Shinichi Uchida was also interpreted by some market participants as opening the door to a YCC tweak on July 28.
Mizuho, however, warned in a note that the speculation is overdone, and a strengthening in the yen from 145 per dollar at the end of June to around 138 currently removes a major risk factor for a hawkish policy adjustment.
"If anything, the probability of policy revisions at the July meeting has probably decreased... There have been none of the catalysts or speculative reports seen ahead of the January BOJ meeting that would directly point to policy revisions at the upcoming meeting."
Benchmark 10-year JGB futures rose 0.1 yen to 147.43, struggling to pull far from Friday's 147.13.
The five-year yield was flat at 0.125%.
The two-year JGB yield was yet to trade as of 0540 GMT. (Reporting by Kevin Buckland; Editing by Rashmi Aich)
