TOKYO May 20 U.S. Treasuries were on the
defensive on Monday, with the benchmark yield near a two-month
peak after data late last week showed U.S. consumer sentiment
rising to its highest level in nearly six years.
* The yield on the 10-year notes stood at 1.954 percent
, little changed from late U.S. levels last week but
near the high of 1.985 percent hit last week.
* The Thomson Reuters/University of Michigan's preliminary
reading on the overall index on consumer sentiment rose to 83.7
from 76.4 in April, far above economists' expectations for 78
and the highest level since July 2007.
* The data eased worries the U.S. economic recovery could
slow down on sharp government spending cuts since early this
* Treasuries were also undermined by speculation the Federal
Reserve may scale down its bond buying programme later this year
as the economy continues to recover and U.S. share prices keep
hitting new highs.
* Investors are thus closely looking to Fed Chairman Ben
Bernanke's testimony on Wednesday, when the central bank will
also release the minutes of its last policy meeting, at which it
said it could increase or reduce bond buying in the future.
* Some Fed policymakers, including the San Francisco Fed
chief who is known as a policy dove, said in the past week the
Fed could reduce its bond purchases.
* "It looks like they are intentionally talking about
tapering bond buying. Bernanke may discuss the risk of the Fed's
policy being too accommodative, to offset the impact of the
minutes, where both increase and cut in QE was debated," said a
trader at a Japanese bank.