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TREASURIES-US bonds gain in Asia as risk appetite fades
TOKYO, June 8 |
TOKYO, June 8 (Reuters) - Benchmark U.S. Treasury bonds rose in Asia on Friday, as stocks tumbled and investors sought the safety of fixed-income assets after Federal Reserve Chairman Ben Bernanke refrained from explicit pledges of more easing ahead.
* Bernanke did keep easing hopes alive in his testimony to a congressional committee on Thursday, saying he was closely monitoring "significant risks" to the U.S. economy from Europe's debt and banking crisis. That suggested to some that the door remains open to more easing at some stage, which also underpinned bonds.
* "Bernanke didn't say, 'We'll do it,' and he didn't say, 'We won't do it,' and the end result was a risk-off reaction that was good for Treasuries," said Tomoaki Shishido, bond analyst at Nomura Securities.
* The focal point of the U.S. central bank's next policy meeting on June 19-20 is whether or not it will ease further to stimulate the economy, perhaps by launching a third round of asset purchases or by extending its "Operation Twist" program that expires this month.
* The yields on 10-year notes fell to 1.61 percent from 1.64 percent in late U.S. trading and 1.63 percent in Tokyo on Thursday, moving closer to their record low of 1.44 percent touched a week ago.
* The yields on 30-year bonds slipped to 2.71 percent from 2.74 percent in late U.S. trade and 2.72 percent in Tokyo on Thursday.
* A move by China to cut rates on Thursday for the first time since the global financial crisis in late 2008 was also viewed by some market participants as an incentive to reduce market risks because of the timing of the move.
China will release economic indicators for May this weekend, including fixed asset investment and industrial production numbers, and some feared the rate cut could be a pre-emptive move heralding dismal readings.
* On the supply side, the Treasury Department will sell $32 billion in new three-year notes and reopen a 10-year note issue by $21 billion and an older 30-year bond issue by $13 billion next week.
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