TREASURIES-Unchanged in Asia, U.S. payrolls awaited
TOKYO, Feb 2 (Reuters) - U.S. Treasuries barely budged in Asia, keeping the benchmark 10-year yield near a 5-1/2-month high as investors awaited U.S. payrolls data due later in the session.
The market regained its footing after signs of stabilisation in the U.S. housing market had prompted investors to sell Treasuries on Thursday, erasing earlier gains made on surprisingly weak manufacturing data.
"People are pretty squared up going into the data," said Adam Mackillop, head of U.S. rates trading in Asia at Barclays Capital in Tokyo.
"Any longs that were out there were purged in the fall yesterday," he said, adding that a strong reading could trigger a a climb in the 10-year yield back towards 4.91 percent, a level hit last week for the first time since mid-August.
On the whole, Thursday's data gave conflicting signals into the direction of the economy, although it did little to fuel expectations that the Federal Reserve may soon cut rates.
Dealers awaited January jobs data due at 1330 GMT. Forecasts are for the creation of 149,000 new jobs last month, a Reuters poll shows, thanks to unusually warm weather and strong consumer spending. The figure came in at 167,000 in December.
ADP Employer Services said on Wednesday that private-sector employment increased by 152,000 in January.
March Treasury futures TYc1 were down 1/32 at 106-20.5/32, not far from 106-6.5/32 touched a week ago for the first time since mid-August.
The yield on the 10-year Treasury US10YT=RR was at 4.841 percent, unchanged from Thursday, when it had slipped to 4.77 percent after the Institute for Supply Management's January manufacturing index fell to 49.3 from 51.4 in December, suggesting shrinkage in factory activity.
Forecasts had been for a rise to 51.9.
The market then reversed those gains on figures showing that pending sales of existing U.S. homes advanced 4.9 percent in December, which exceeded expectations and posted their biggest monthly gain since 2004.
Dealers said that Asian investors were interested in picking up 10-year Treasuries in the 4.8 percent region, adding that the next key level above that was 5.0 percent.
The two-year yield US2YT=RR was at 4.967 percent, also unchanged from levels in late New York.
