SINGAPORE Oct 19 The U.S. 10-year Treasury
yield eased on Friday but remained near a one-month high, having
climbed this week on upbeat U.S. housing data and as a drop in
Spanish bond yields allayed worries over the euro zone's debt
* The 10-year Treasury yield stood at 1.820 percent
in Asia, down slightly from the previous day's
one-month high of 1.836 percent. Compared to late U.S. trade on
Thursday, 10-year notes were up 3/32 in price and the 10-year
yield was down 1 basis point.
* While demand for Treasuries in Asia on Friday was tepid,
investors may start snatching up bonds if they get the sense
that further rises in bond yields will be limited in the near
term, said a trader for a U.S. brokerage house in Tokyo.
If that turns out to be the case, some traders may unwind
bearish bets on Treasuries and give the market a lift, he said.
"So I don't want to sell too aggressively, to take too big
of a short position," the trader added.
* Safe haven Treasuries have come under pressure this week
as Spanish bond yields fell after Moody's Investors Service
affirmed Spain's investment grade rating, with strong U.S.
housing starts data on Wednesday having added to the sell-off.
* The economic backdrop suggests that bond yields may stay
under upward pressure going into the year-end, said Tomoaki
Shishido, rate analyst for Nomura Securities in Tokyo.
"It looks like economic data, at least in the United States,
could be strong going into the year-end, and some Chinese
indicators have also started to come in on the strong side," he
Still, the Federal Reserve's stance that it is unlikely to
raise interest rates at least until mid-2015, and expectations
for the Fed to continue with its bond purchases well into next
year, may help limit rises in Treasury yields, he added.
"Buying will probably tend to emerge when the 10-year yield
nears 2 percent," Shishido said, adding that this week's rise in
yields has already helped to attract investor demand.
"We saw pretty significant over-the-counter buying by
Japanese players yesterday," he said.
A Reuters poll earlier this month showed that economists
expect the Fed to buy a total of $600 billion of bonds under its
newest stimulus program, known as QE3, and to buy Treasuries
outright after its "Operation Twist" stimulus ends in December.