LONDON, April 2 U.S. 10-year T-note yields fell
to two-month lows on Tuesday as data showing a slowdown in U.S.
manufacturing and worries about the wider impact of Cyprus's
bailout deal kept low-risk assets in demand.
The Institute for Supply Management's gauge of manufacturing
activity released on Monday showed that factory activity in the
United States grew at the slowest rate in three months in March.
Cyprus detailed over the weekend losses of around 60 percent
for savers of more than 100,000 euros as part of a bailout
agreed just over a week ago. The deal was the first in euro zone
history to make bank depositors share the burden and raised
concerns it could be used as a model for solving other crises.
U.S. 10-year T-note yields were last 0.3 basis
points lower at 1.8314 percent, having hit a two-month low of
1.823 percent earlier in the session. T-note futures were
3/32 higher at 132-07/32.
"The market still wants to be bought here ... 1.80 percent
is the target," one trader said. "Of course the non-farm
payrolls (data on Friday) is the wild card. If it comes softer
we could test 1.75 percent."
The economic impact from $85 billion in automatic federal
spending cuts that began on March 1 could start appearing in
economic data soon and lend support to Treasuries this quarter,
said Tomoaki Shishido, rate analyst for Nomura Securities in
Given such an outlook, the 10-year yield may initially head
lower in the current April-June period, said Shishido, who is
expecting a 1.7 percent to 2.1 percent range for this quarter.
The 10-year yield could rebound later on, however, if U.S.
lawmakers were to decide to retroactively cancel the spending
cuts in coming months, he said.