TOKYO Dec 6 U.S. Treasuries were firm in Asia
on Thursday, with the yield on 10-year notes near a three-week
low on concerns over the fiscal cliff as well as hopes for fresh
easing steps by the Federal Reserve.
* The 10-year notes traded at a yield of 1.591 percent
, little changed from late U.S. levels and near
Wednesday's low of 1.576 percent, which was its lowest level in
nearly three weeks.
* Although many investors expect political leaders in
Washington to eventually reach a deal to avert a sharp fiscal
contraction from the planned spending cuts and expiry of tax
cuts early next year, there was no sign of progress in talks on
* The White House and Republicans in Congress spent much of
the day talking up their positions.
* "Most people think there will be a deal at some point.
Still I guess politicians cannot compromise easily, which means
there's risk they will go off the cliff," said a trader at a
* The two-year yield stood at 0.238 percent, and
could fall to its lowest level since early October, as market
players expect the Federal Reserve to end selling in short-term
notes as the Operation Twist expires this month.
* Economists expect the Fed to replace the Operation Twist,
in which it buys long-dated bonds and sells the same amount of
shorter-dated ones, with a fresh bond buying programme.
* "Because of Operation Twist, brokers have a large amount
of short-term bonds. That will probably disappear next year,"
said the trader.