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TREASURIES-Rise in Asia on doubt about Fed rate hikes
TOKYO, June 17 (Reuters) - U.S. Treasuries rose in Asian trading on Tuesday, after a flurry of media reports stirred doubts about how aggressively the Federal Reserve might raise interest rates this year.
Such doubts had been fuelled on Monday by a Washington Post column by Robert Novak asserting that market speculation the Fed was ready to raise rates appeared to be "dead wrong".
Reports in the Financial Times and the Wall Street Journal on Tuesday gave investors additional reasons to re-evaluate their monetary policy expectations.
The FT's online edition said market expectations for the Fed to boost rates three or four times by the end of the year did not seem to match the balance of views within the Fed. [ID:nT75433]
The Wall Street Journal's online edition said the Fed does not appear to see a compelling case for raising rates before autumn unless the inflation outlook deteriorates considerably. [ID:nT77881]
September Treasury note futures rose 5.5/32 to 111-17/32 TYv1, pulling away from a seven-month low of 111-0.5/32 struck on Friday.
The two-year note -- the sector most sensitive to changes in monetary policy -- rose 4/32 in price to yield 2.981 percent US2YT=RR, down 6 basis points from late U.S. trading on Monday.
The benchmark 10-year note rose 10/32 in price to yield 4.237 percent US10YT=RR, falling 4 basis points from late New York.
Treasuries retreated last week as anti-inflation talk from the Fed, including from chairman Ben Bernanke, persuaded the market that the central bank could raise rates two or three times before the end of the year to thwart any upward trend in inflation expectations.
U.S. short-term rate interest futures now show that investors widely expect the Fed to keep rates at 2.0 percent at its two-day meeting that ends next Wednesday and to raise them to at least 2.25 percent in August.
The futures show that investors are bracing for the Fed to boost rates by at least 0.75 percentage point from the current 2.0 percent by the end of the year. FEDWATCH (Editing by Brent Kininmont)
