SINGAPORE, March 26 U.S. 10-year Treasuries
edged lower on Tuesday, but losses were limited as investors
worried that a contentious rescue scheme for Cyprus could become
a template for resolving any future banking sector crises in the
* Ten-year Treasuries slipped about 2/32 in price in Asian
trade to yield 1.929 percent. The 10-year yield rose
roughly 1 basis point from late U.S. trade, but remained below
Monday's one-week high of about 1.974 percent.
* Treasuries had initially retreated on Monday after Cyprus
clinched a last ditch deal with the European Union to avoid a
banking sector collapse. The plan involves closing down the
country's second largest bank and will inflict heavy losses on
Treasuries, however, turned higher later on Monday after the
head of the Eurogroup of euro zone finance ministers, Jeroen
Dijsselbloem, said the rescue programme for Cyprus will serve as
a model for dealing with future euro zone banking crises.
He later appeared to backtrack, saying Cyprus was a specific
case with exceptional challenges.
* Still, worries are likely to linger in the market that the
aid scheme for Cyprus and the idea of having bank depositors
bear a burden, could become a model for future rescue programmes
in the euro zone, said Tomohisa Fujiki, interest rate strategist
for BNP Paribas in Tokyo.
Another supportive factor for Treasuries is uncertainty
about the U.S. economy's prospects, Fujiki said.
"The U.S. economy has held up pretty firmly since the start
of the year, but the concern is about the outlook," he said,
referring to the potential impact from the federal budget cuts
that came into effect this month.