TREASURIES-U.S. bond prices steady as investors await Fed clues

TOKYO Tue May 21, 2013 2:34am EDT

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TOKYO May 21 (Reuters) - U.S. Treasuries were steady in Asian trade on Tuesday, with the benchmark yield staying away from a two-month peak it touched last week as investors awaited this week's testimony from the Federal Reserve chief to discern the direction of U.S. monetary policy.

* Fed Chairman Ben Bernanke will testify on the U.S. economy on Wednesday to the congressional Joint Economic Committee, and investors will be closely watching for any signals that the central bank will taper its $85 billion in monthly bond purchases later this year if the economic recovery continues.

Also Wednesday, the Fed will release the minutes of its last policy meeting.

* The yield on the 10-year notes stood at 1.965 percent on Tuesday, steady from late U.S. trade on Monday and still shy of last week's high of 1.985 percent.

* The yield on 30-year notes stood at 3.175 percent, also steady from late U.S. trade.

* Japanese investors in particular have been following the U.S. Treasuries market closely, as Japanese government bond trading has been volatile since the Bank of Japan unveiled its own massive monetary stimulus programme on April 4. The BOJ pledged to double its bond holdings in two years to help the government meet its 2 percent inflation target.

* "Treasuries have been less volatile than JGBs lately, and any time the 10-year U.S. yield tops 2 percent, Japanese investors start to take a look over there," said a fixed-income fund manager at a Japanese asset management firm.

* Dallas Fed President Richard Fisher said on CNBC television on Monday that the Fed's policies have boosted stocks and helped wealthy people, but he questioned whether they helped the broader U.S. economy.

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