TOKYO, June 14 U.S. Treasuries were firm in Asia
on Friday as traders took the view that any end to the Fed's
bond buying programme will be gradual and that no rates hikes
* A report in The Wall Street Journal that an adjustment in
the Fed's bond-buying program did not mean that the U.S. central
bank would end "all at once" or that the Fed was "anywhere near
raising short-term interest rates" helped support sentiment.
* The article triggered short-covering in interest rates
futures, such as the eurodollar three-month rate futures
and Fed funds rate futures .
* The 2014 September eurodollar contract rose to
99.50, its highest level in 2 1/2 weeks, and up from Tuesday's
10-month low of 99.365, a level that is fully pricing in a 25
basis point rate hike.
* The 10-year U.S. notes yield stood at 2.154 percent
, off a 14-month high of 2.293 percent hit on
Tuesday, having fallen 8 basis points on Thursday.
* Investors expect the Federal Reserve to assure markets
that any scaling back of its bond buying does not mean that a
rate hike is around the corner at its policy meeting next week.
* Fears of the Fed's tapering have hit asset markets in the
past few weeks, sending emerging market benchmarks to lows not
seen in months.
* "The WSJ article gave the market a bit of relief. But
there's no denying that the Fed is likely to scale back its bond
buying so I don't expect the 10-year yield to fall below two
percent," said a trader at a Japanese bank.
* That relief offset the negative impact from data showing a
drop in new jobless claims in the latest week, evidence of
strength in the economy that would argue for less Fed
accommodation rather than more.
* Retail sales were more robust than expected, rising 0.6
percent in May, above economists' forecast of 0.4 percent, after
0.1 percent gain in April.