JGBs edged higher in early Tokyo trade, following overnight gains in U.S. Treasurys. The correlation between Japanese government bonds and Treasury prices remains strong, with moves in one market often prompting similar shifts in the other.

Analysts note that a continued decline in crude oil prices can ease inflation concerns in Japan, potentially reducing urgency for the Bank of Japan to adjust rates. This macro backdrop supports a modest rally in JGB prices.

Today the Japanese Finance Ministry will auction roughly 2.6 trillion yen of 10-year JGBs. “We expect the auction to produce a benign to somewhat soft result,” says Miki Den of SMBC Nikko Securities in a research note.

The 10-year JGB yield slipped 1 basis point to 2.810%, reflecting the slight upward pressure on bond prices.