TOKYO: The yields on US 10-year Treasuries hovered near 5-1/2 week lows on Wednesday and within shouting distance of historic depths on concerns over a global economic slowdown and the euro zone debt crisis.
The yield on benchmark 10-year Treasuries was at 1.51 percent, almost unchanged from late US trade. It hit a record low of 1.44 percent on June 1, down from around 2.40 percent in March as fears about the impact of the European debt crisis prompted investors to seek safe-haven fixed-income assets.
"The global economy is slowing down and this is going to last for quite some time yet - that's what's keeping the yields depressed. I wouldn't be surprised if we see them hitting record lows again pretty soon," said Arihiro Nagata, the head of foreign bond investment at Sumitomo Mitsui Banking Corp.
The latest source of uncertainty was a hearing by the German Constitutional Court into whether the euro zone's bailout fund, known as the European Stability Mechanism, and planned changes to the region's budget rules are compatible with German law.
Investors awaited the minutes of the US central bank's meeting last month, due at 1800 GMT. They may reveal the extent to which the Fed is leaning toward more easing steps, particularly in the wake of last week's disappointing employment report.
Wall Street economists see a 70 percent chance the Fed will attempt to spur borrowing and demand with a third round of quantitative easing, or QE3, according to a Reuters poll conducted on Friday.
But Sumitomo Mitsui's Nagata had a different opinion. "The Fed meetings this and next month will be crucial. Many people may again get their hopes high for more easing, but I doubt the bank would loosen the policy further. They know that it really is their last resort," Nagata said.
The yield on 30-year bonds stood at 2.612 percent, steady from late US trade on Tuesday.
Treasury Department sells 10-year notes at 1700 GMT.
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