SINGAPORE Dec 17 U.S. 10-year Treasuries dipped
on Monday, as House of Representatives Speaker John Boehner's
offer to accept a tax rate increase for the wealthiest Americans
stirred hopes for a deal to avoid a looming fiscal crisis.
* Ten-year Treasuries fell about 6/32 in price to yield
about 1.727 percent, up roughly 2 basis points from
late U.S. trade on Friday.
The 10-year yield, however, stayed below Friday's peak of
1.749 percent, which was the highest level for the 10-year yield
in about a month.
* "Boehner made an offer to (President Barack) Obama,
basically caving in on the highest income tax rates... Sounds
like they are getting closer to a deal, even though they haven't
hit one yet," said a trader for a U.S. brokerage house in Tokyo.
Moves in Treasuries were exaggerated, however, by thin
trading volumes, the trader added.
At issue is whether U.S. lawmakers can forge a deal to avoid
the "fiscal cliff" of $600 billion in tax increases and spending
cuts due to come into effect in early 2013. The risk is that the
U.S. economy could fall into recession if such fiscal tightening
were to take effect.
News of Boehner's proposal helped drag Treasuries lower,
said a trader for a European brokerage house in Tokyo. He
cautioned against reading too much into the move, however,
saying that the moves were fairly limited.
* Under current law, the 35 percent top U.S. tax rate is
scheduled to expire on Jan. 1, and would automatically go to
39.6 percent. Boehner's proposal would allow that rate to rise
as scheduled at a threshold of $1 million - putting it back to
where it was during the Clinton administration.
Although the White House has not accepted Boehner's gambit,
it could push negotiations away from entrenched, ideological