SINGAPORE Feb 5 U.S. 10-year Treasuries inched
lower on Tuesday, taking a breather after rallying the previous
day, when safe haven U.S. debt rose on worries about mounting
political uncertainty in Spain and Italy.
* Ten-year Treasuries slipped 2/32 in price to yield about
1.964 percent, up about 1 basis point from late U.S. trade. The
10-year yield has slipped back after hitting a high of 2.059
percent on Monday, its highest level since April 12 of last
* Treasuries bounced on Monday as political news from Europe
triggered a rise in Spanish and Italian bond yields and stoked a
bid for safe haven U.S. debt. A fall in U.S. shares also gave
Treasuries a boost on Monday.
Spain's opposition party on Sunday called for the
resignation of Prime Minister Mariano Rajoy over a corruption
scandal. Rajoy denies any wrongdoing.
In Italy, the increased popularity of former prime minister
Silvio Berlusconi and his chances of regaining power also raised
worries about Italy's struggle to fix its fiscal problems.
* Market players, however, cautioned against reading too
much into Monday's moves at this point.
The headlines about Europe were probably used as a reason to
take profits on positions betting on a rise in risky assets,
said Tomoaki Shishido, rate analyst for Nomura Securities in
Tokyo. A sharp rally in Treasuries seems unlikely at this point,
even if they do find some support, he said.
"The (Treasuries) market has dropped to levels that look
attractive, so prices are likely to be supported on the
downside," he said, adding that 10-year notes will probably
find good support at levels near 2.1 percent on the 10-year
"But it is hard to think there will be any factors in the
near term that could trigger a major bounce (in Treasuries),"
* Moves in European markets later on Tuesday, and whether
they retrace some of the moves seen on Monday, could help
determine whether market players start refocusing attention on
the risks associated with the euro zone's sovereign debt crisis
in a major way, said a trader for a U.S. brokerage house in
"If there is a retracement today, I don't think the focus
will return to such issues all that much," he said.