TOKYO, May 25 (Reuters) - Japan's 10-year government bond (JGB) yield hit more than a two-week high on Thursday, as an auction for bonds with the same maturity set for next week weighed on sentiment.
The 10-year JGB yield rose 2 basis points (bps) to 0.425%, its highest since May 9.
"The 10-year bonds have been trading range bound. But there might have been sell-offs associated with the rebalance of portfolios at pension funds as domestic stocks rallied," said Keiko Onogi, senior JGB strategist at Daiwa Securities.
"The yield rose also in the run up to the auction for the 10-year bonds next week."
Benchmark 10-year JGB futures fell 0.14 yen to 148.47, after falling to as low as 148.41, its lowest since May 9, following weaker overseas bond prices overnight amid slow-moving negotiations to raise the U.S. debt ceiling.
Key U.S. Treasury note yields ticked higher on Wednesday, while yields surged above 7% on some bills due for repayment on June 1, the first day that the government might not be able to make payments without the debt ceiling increase.
The 20-year JGB yield rose 3 bps to 1.035% and the 30-year yield rose 2.5 bps to 1.275%.
The two-year JGB yield was flat at -0.070% and the five-year yield rose 1.5 bps to 0.115%.
The 40-year JGB yield rose 0.5 basis point to 1.440%.
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