TREASURIES-Caught between high prices, market jitters

By Rika Otsuka

TOKYO, Nov 15 (Reuters) - Conflicting concerns kept U.S. Treasuries mixed in Asia on Thursday, with high prices putting some buyers off even as concerns of spreading credit market turmoil fueled demand for safe-haven investments.

That left many investors happy to wait for a string of economic reports later in the day for clues on U.S. monetary policy.

In a report underscoring the impact of the mortgage and credit market malaise, Barron's Online reported on Wednesday that a $5 billion money market fund run by General Electric Co's (GE.N: Quote, Profile, Research, Stock Buzz) asset management unit was offering investors an option to redeem their holdings at 96 cents on the dollar. [ID:nWEN2599]

Adding to investor jitters, NYSE Euronext Chief Executive John Thain, who was named as CEO of Merrill Lynch & Co Inc MER. from next month, said on Wednesday that further credit-linked write-downs in the financial services industries were possible because of continued pricing pressure. [nN14235414]

On the other hand, investors were reluctant to pick up government debt as a rally in the past month has made Treasuries expensive.

"Although the number of people fearing a recession is increasing, the market's consensus view is still that the U.S. economy will be able to avoid a recession," said Hiroki Shimazu, a market economist at Mizuho Securities. "That is making it hard for investors to continue chasing Treasuries."

Worries about the fallout from the housing downturn have led investors to think that the Federal Reserve will cut interest rates again next month, generating a wave of safe-haven buying of Treasuries.

Flight-to-safety bids boosted shorter-dated Treasuries, pulling two-year yields as low as 3.388 percent on Tuesday, their lowest since February 2005. That is more than 100 basis points below the fed funds rate.