TOKYO: Treasuries edged slightly higher in Asia on Wednesday, bolstered by concerns over whether Greece can keep to its austerity programme, though a large amount of new supply this week is expected to keep prices in check.
Greece must implement tough reforms and cost-cutting measures as a condition of a second round of aid that will allow it to avoid a chaotic default next month.
"Greece will get its bailout, and the news of this sank bond prices yesterday, but now comes implementing the reforms it agreed to, and this process will hurt," said a fund manager at a Japanese asset management company.
"Concerns about Greece are likely to support bonds and keep yields in check even with all of the upcoming sales this week."
The Treasury will auction $35 billion in five-year notes on Wednesday and $29 billion in seven-year debt on Thursday.
The Federal Reserve on Tuesday sold $8.61 billion of Treasuries maturing December 2012 through May 2013, as part of its "Operation Twist" stimulus programme aimed at bringing down long-term borrowing costs, under which it sells shorter-dated securities and buys longer-dated bonds.
On Thursday the Fed is scheduled to sell $8 billion to $8.75 billion of Treasuries maturing April 2014 through February 2015.
The yield on the 10-year note eased to 2.06 percent from 2.08 percent in late US trade but above 2.03 percent in Asia on Tuesday.
The yield on 30-year Treasuries inched down to 3.21 percent from 3.22 percent in US trading.
The yield on the two-year note was at 0.30 percent , after it rose as high as 0.31 percent in the open market in the US on Tuesday, marking its highest level since late October.
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