LONDON, April 11 U.S. Treasury debt prices edged
up in Europe on Thursday with weekly jobless claims due later in
the day expected to show the labour market remains weak,
supporting demand for low risk bonds.
U.S. Treasuries stabilised after a drop on Wednesday
triggered by minutes to the Federal Reserve's March policy
meeting that stirred fears the central bank may stop buying
bonds by year-end.
Those concerns have, however, been tempered by uncertainty
over how soon the Fed will slow or end the bond purchases,
especially given the disappointing March payrolls report
released last Friday.
"The weekly jobless claims, retail sales tomorrow and PPI
(producer price inflation) data will be watched a lot more
closely after nonfarm payrolls," a trader said.
"People are expecting softer jobless claims on the back of
the weaker nonfarm numbers that we saw last week so the market
is set up for a little bit of disappointment there."
Ten-year T-notes were last 2/32 up in price to
yield 1.798 percent, down 1 basis point from late U.S. trade.
The 10-year yield rose around 6 bps on Wednesday, extending
a bounce from this year's low of 1.677 percent set last Friday
after the Bank of Japan announced huge stimulus measures,
prompting flows into non-yen denominated assets.
Treasuries had come under pressure after the minutes of the
Fed's March meeting showed that a few policymakers expected to
slow the pace of asset purchases, currently at $85 billion a
month, by mid-year and end them later this year. Several others
expected to slow the pace a bit later and halt the quantitative
easing programme by year-end.
Some analysts said it was unclear how quickly they could
move as it was hard to tell just how strongly the U.S. labour
market and housing market will recover over the next few months.
"Clearly the Fed is already talking about when they should
end QE (quantitative easing) but much is going to depend on
labour market conditions. They may wait until the end of the
year before deciding," said Nick Stamenkovic, a strategist at
RIA Capital Markets.
Japanese data on capital flows raised some questions on bets
that the Bank of Japan's aggressive stimulus will prompt
Japanese investors to increase their buying of Treasuries and
other foreign bonds offering higher returns than domestic debt.
The data, however, showed Japanese investors sold a net
1.145 trillion yen ($11.5 billion) in foreign bonds last week,
their biggest selloff in a year, as they cashed in gains at the
start of Japan's financial year.
Nevertheless, analysts say Japanese investors were more
likely to reinvest their money abroad to seek higher yields.