TREASURIES-US bonds gain on euro concerns, lack of supply pressure
LONDON, April 12 (Reuters) - U.S. Treasuries rose on Friday as concerns about how the euro zone will address the problems of its weakest members and the lack of supply pressure near-term pushed investors towards the low-risk bonds. This week's sales of $66 billion in longer-dated U.S. debt weighed on U.S. Treasury prices in previous sessions, especially as lukewarm demand suggested that an anticipated surge in U.S. bond demand from Japanese investors has yet to materialise. The bets of increased Japanese flows were triggered by the Bank of Japan's plans to print unprecedented amounts of money and push domestic investors towards higher-yielding non-yen assets abroad. Despite the fact that so far there has been little evidence of an increase in Japanese demand, traders still expect such flows in the future. U.S. 10-year T-note yields were last 3.6 basis points lower at 1.7553, while T-note futures were 9/32 higher at 132-53/64. Traders also cited nervousness before an informal meeting of European Union finance ministers starting later in the day, where Cyprus's rescue package will be on the agenda. Cyprus and the EU have agreed in principle how the island will raise its 13 billion euro contribution to a bailout package. However, its contribution is almost twice the original estimate due to the island's sharp recession, fuelling concerns about whether the sums will add up in the longer run. "Cyprus needing an extra 6 billion and there's concern that Portugal may have to seek a second bailout, all the stuff that is part of the discussion at the (EU) meeting is making Treasuries trade better after the auctions," one trader said. The U.S. government will release its report on retail sales later on Friday. The median forecast among economists polled by Reuters was for retail sales to show no change in March after a 1.1 percent jump in February. If, like recent jobs data, March sales were weaker than expected, T-note yields could test this week's lows at 1.72 percent, the trader said.
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