March 21, 2011 / 6:25 AM / 7 years ago

TREASURIES-Bonds pull back as equities push higher

HONG KONG, March 21 (Reuters) - U.S. Treasuries slipped on Monday on solid gains in Asian equities and a rise in S&P 500 futures, with market players showing an eagerness to pick up risky assets after the Bank of Japan’s aggressive fund injections last week.

* Activity was quiet with a market holiday in Japan for the spring equinox, shutting the trading desks in Tokyo where many Treasury dealers still base their Asia operations. Cash Treasuries were untraded in Asia.

* Investors showed surprising resilience to Japan’s simmering nuclear crisis, weekend air strikes on Libya by Western powers, a jump in oil prices and even China’s tightening of bank reserve requirements late on Friday.

* Some traders said the market was likely to become more worried about the situation in Libya situation if it turned into a ground war.

* The BOJ’s hefty fund injections to calm Japanese markets last week made it another major central bank pumping money into the global banking system, along with the Federal Reserve’s ongoing bond purchase programme.

* Bank current account balances at the BOJ soared 15 trillion yen ($185 billion) last week, nearly doubling and near the peaks reached during the BOJ’s first bout of quantitative easing from 2000 to 2006.

* With the BOJ and Fed both easing policy, some traders said risky assets may benefit in the same way they did after the Fed launched QE2 as long as the economic toll from Japan’s nuclear crisis does not jump dramatically higher.

* June T-note futures fell 14/32 to 120-8/32, pulling further away from a three-month high of 121-26/32 struck last week when the plunge in Japanese shares sparked a broad global selloff.

* S&P e-mini futures were up 0.8 percent, tracking a 1.1 percent gain in the MSCI Asia-Pacific ex-Japan .

(Reporting by Eric Burroughs)

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