Japan's bond yields rise after upbeat trade talks in Washington

By Kevin Buckland

TOKYO, April 17 (Reuters) - Benchmark 10-year Japanese government bond yields rose on Thursday, undoing part of the previous day's decline, as Tokyo's smooth first round of trade talks in Washington diminished the appeal of safe-haven debt.

The 10-year JGB yield JP10YTN=JBTC added 1 basis point (bp)to 1.30%, while equivalent JGB futures 2JGBv1 fell 0.43 yen to 140.68 yen. Yields move inversely to bond prices.

At the same time, super-long JGB yields continued their retreat from two-decade peaks reached at the start of this week, with worries receding over a big fiscal spending package from Prime Minister Shigeru Ishiba before July's upper house polls.

Politicians have recently stepped back from a proposal for cash payouts and there have been suggestions for a longer timeline before stimulus is implemented.

The 30-year JGB yield JP30YTN=JBTC dropped 6 bps to 2.645% from as high as 2.845% on Monday. The 20-year yield JP20YTN=JBTC slid 4 bps to 2.20% down from 2.44% at the start of the week.

Meanwhile, the five-year JGB yield JP5YTN=JBTC rose 4 bps to 0.875%. Two-year notes JP2YTN=JBTC had not yet traded as of 0500 GMT.

Nervy Japanese investors had bought JGBs across tenors on Wednesday as Japan's chief negotiator Ryosei Akazawa flew to Washington for talks with U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson, with President Donald Trump also sitting in unexpectedly.

Trump lauded the talks as making "big progress" on social media and Akazawa told reporters that the White House wants a deal with Tokyo as a "top priority."

However, Bank of Japan (BOJ) Governor Kazuo Ueda on Thursday reiterated that Trump's aggressive tariffs could hurt Japan's economy.

Nomura pared expectations for BOJ interest rate increases over the coming 12 months to just one in January, from forecasts of hikes in July and January previously.

"Even after the worst of the impact of Trump tariffs has passed... we expect the pace of economic recovery to be slow," Nomura analysts said.

"A negative impact from Trump tariffs on corporate earnings is unavoidable," they added.

"Wage growth, a lagging indicator, is likely to come under downward pressure."