TOKYO—Japanese government bond yields climbed Thursday despite a smooth auction of two-year notes, as domestic stock prices rose and U.S. Treasury yields jumped a day earlier.
The benchmark 10-year yield gained 0.03 percentage point to 1.155%, putting it in sight of the recent 1.195% high, hit in September. The U.S. 10-year yield on Wednesday rose to 2.914%—the highest since Aug. 5—from 2.764% on Tuesday. U.S. markets were closed Thursday for the Thanksgiving holiday and will close early on Friday, at 2 p.m. ET.
The Nikkei Stock Average added 0.5%.
A solidly bid auction of two-year Japanese government bonds had only a brief impact on the market. The government sold 2.401 trillion yen ($28.87 billion) of the paper at a lowest price of 100.055, in line with market expectations, yielding 0.172%. The new bonds carry a coupon of 0.2%, higher than 0.1% in the previous issue.
Analysts said demand remained solid in the sector as the coupon compares even more favorably with the Bank of Japan's 0.00%-0.10% policy target interest-rate range.
Thursday's auction received 7.667 trillion yen in bids, for a bid-to-cover ratio of 3.19. That was down from 5.54 in October's tender. While a lower bid-to-cover ratio is an indication of weaker demand, analysts said such deterioration was expected.
