LONDON Aug 23 U.S. Treasuries edged higher in
Europe on Thursday, with safe-haven demand underpinned after
minutes to the Federal Reserve's latest meeting revived talk of
more monetary stimulus.
Improving economic data released after the Fed's August
meeting had cooled speculation that the central bank would
announce a new bond purchase programme at its next meeting in
September, spurring a sell-off in Treasuries.
They rallied on Wednesday after the minutes to this month's
meeting showed the Fed was likely to deliver another round of
economic stimulus "fairly soon", unless the U.S. economy
U.S. T-note futures were last up 10/32 at 133-20/32 while
cash 10-year T-notes were last up 3/32 in price to
yield 1.685 percent, about 1 basis point lower from late New
Further gains were, however, seen limited before Fed
Chairman Ben Bernanke's speech at an annual conference in
Jackson Hole late next week, which will be closely scrutinised
for signs on whether the bank will act in September.
"FOMC minutes have spurred expectations of another round of
QE (quantitative easing) but the market is waiting for
Bernanke's speech at Jackson Hole when he is expected to unveil
further details on the Fed's options. The next employment report
would also be crucial for the Fed," RIA Capital Markets
strategist Nick Stamenkovic said.
"A further rally in Treasuries will depend on signs of
weakness in the U.S. economy and confirmation from Bernanke that
they are about to pull the trigger."
Stamenkovic expects benchmark yields to be hemmed into the
1.60-1.85 percent range where they have been trading over the
past two weeks.
Traders were also wary of taking big positions in the market
before U.S. jobs data next month and a European Central Bank
meeting in early September - when the bank is expected to give
details on its latest plan to stem the euro zone debt crisis -
as well as the Fed's policy meeting on Sept. 12-13.
"It's difficult to see this rally lasting for long. A lot
depends on what Bernanke says at Jackson Hole and what's coming
up in September," a trader said.