TOKYO, March 28 (Reuters) - Japanese government bond yields sank on Thursday, tracking an overnight decline for U.S. peers, while traders also tried to determine how soon the Bank of Japan could raise interest rates again.
The 10-year JGB yield fell 1.5 basis points (bps) to 0.700% as of 0500 GMT, the lowest level since March 6.
Five-year yields also declined by the same amount to 0.345%, a level not seen since Feb. 29.
U.S. 10-year Treasury yields stood at about 4.2% on Thursday after sinking as low as 4.182% overnight for the first time since March 13.
From next week though, Japanese yields are likely to head higher as Japan begins a new fiscal year, said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities.
"There will be fresh issuance of JGBs and probably corporate bond issuance will pick up, so there will be some supply pressure that will push up JGB yields," she said.
Taken together with speculation in the market that the BOJ might move faster with additional rate hikes than initially estimated, the 10-year yield could reach 0.9% next quarter, Muguruma added.
Minutes from the BOJ's meeting last week - when the central bank exited negative interest rate policy with its first hike since 2007 - showed some board members saw the need to go slow with a normalisation of policy.
The two-year JGB yield, which is more sensitive to monetary policy expectations, was flat at 0.19%, staying close to the nearly 13-year high of 0.205% from Friday.
However, super long JGB yields slid, with the 20-year yield sliding 3 bps to 1.450% and 30-year yields dropping 2.5 bps to 1.755%, both the lowest since March 6.
Benchmark 10-year JGB futures rose 0.14 yen to 145.88. Bond yields fall when prices rise. (Reporting by Kevin Buckland; Editing by Eileen Soreng)
