TREASURIES-Bonds firm in Asia, but supply concerns cap gains

TOKYO Mon Jan 7, 2013 12:48am EST

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TOKYO Jan 7 (Reuters) - Benchmark U.S. Treasuries firmed slightly in Asian trading on Monday, with yields creeping away from 8-month highs hit in the previous session as some investors covered short positions.

* U.S. Treasuries sold off sharply late last week after minutes of the Federal Reserve's December meeting raised fears the central bank could pare its asset purchases by the end of the year if the economy improves enough.

* Economists at nine of 16 primary dealers -- the large financial institutions that do business directly with the Fed -- said they expected the central bank's current programme of buying $45 billion per month of Treasuries to end in 2013.

* "The range has re-set a few basis points higher, but I think some investors still think that this is not a time to be too short," said a fixed-income trader at a European asset management firm in Tokyo.

"That said, I think this week's supply is going to limit gains."

* On the supply side, the Treasury will offer $32 billion of three-year notes on Tuesday, $21 billion of reopened 10-year notes on Wednesday and $13 billion of reopened 30-year bonds on Thursday.

* Yields on 10-year Treasuries stood at 1.883 percent in Asian trade on Monday, down from 1.899 percent in late U.S. trade on Friday

* Yields on 30-year Treasuries eased slightly to 3.074 percent from 3.092 percent on Friday.

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