TOKYO, April 11 (Reuters) - Japanese two-year government bond yields jumped on Thursday to their highest in more than 14 years, pulled by a surge in U.S. yields after stubborn consumer inflation knocked back bets for when the Federal Reserve will first cut interest rates.
At the opposite end of the maturity spectrum, 30-year JGB yields also climbed to the highest in nearly 11 years, accelerating their rise after an auction of 20-year bonds drew weak demand.
The two-year JGB yield rose 3.5 basis points (bps) to 0.265% as of 0525 GMT, the highest since November 2009.
The 30-year yield climbed 6 bps to 1.925%, a level not seen since May 2013. The 20-year yield jumped 8 bps to a five-month high of 1.650%.
Domestic analysts said that despite the recent rise in yields, investors decided to take a wait-and-see approach to the auction with monetary policy paths in Japan and the U.S. still unclear, particularly after the surprisingly strong inflation reading overnight.
Traders now see September as the likely month for a Fed rate reduction, instead of June. Two-year Treasury yields soared as much as 24 bps to 4.988%, the highest since mid-November.
"Yen interest rates are greatly influenced by overseas interest rates (and) if the expectation of a near-term Fed rate cut fades, U.S. interest rates will continue to remain high," said Shoki Omori, chief Japan desk strategist at Mizuho Securities.
"The Bank of Japan may be forced to raise interest rates reluctantly due to concerns about upward pressure from U.S. interest rates and the speed of the dollar-yen's rise."
The dollar reached a 34-year high of 153.24 yen overnight, supported by a climb in 10-year U.S. Treasury yields to a five-month high of 4.568%.
Ten-year JGB yields rose 6 bps to 0.855% and five-year yields rose 5.5 bps to 0.480%, both also five-month peaks. (Reporting by Kevin Buckland; Editing by Subhranshu Sahu)
