TREASURIES-U.S. 10-year notes dented by upbeat data, yen's drop

SINGAPORE Fri May 10, 2013 12:24am EDT

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SINGAPORE May 10 (Reuters) - U.S. 10-year Treasuries sagged on Friday, after the previous day's jobless claims data eased some concern about the economy's outlook and as the dollar's rise to a four-year high versus the yen weighed on sentiment.

* The 10-year yield hit a one-month high of about 1.844 percent earlier, its highest level since early April. Ten-year notes were last down 8/32 in price and the 10-year yield stood at 1.841 percent, up roughly 3 basis points from late U.S. trade.

* Treasuries remained on the defensive after stronger-than-expected U.S. jobless claims data the previous day provided fresh signs of the labour market's resilience.

* The dollar's rise to a four-year high of 101.20 yen on Friday also weighed on Treasuries, market players said.

Ten-year Treasuries seemed to be moving in sympathy with the dollar's moves versus the yen, said a trader for a European brokerage in Tokyo.

The fall in the yen gave a lift to Tokyo shares and seemed to be weighing on Japanese government bonds, and Treasuries retreated as a result, the trader said, adding that market positioning may also be playing a part.

"We've just come out of supply, I think that there has been a lot of complacency in the past that the market always rallies after the end of the supply, and so I think people are a little bit long too," he said, referring to this week's auctions in Treasuries.

* A possible focal point later on Friday is a speech by Federal Reserve Chairman Ben Bernanke.

"Given these moves in the market, his comments will probably attract even more attention," said Tomohisa Fujiki, interest rate strategist for BNP Paribas in Tokyo.

* Latest Japan capital flows data showed that Japanese investors turned net buyers of foreign bonds in the last two weeks, underscoring expectations that Tokyo's push to reflate its economy would spur capital outflows as domestic investors seek higher yields abroad.

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