SINGAPORE: US 10-year Treasuries rose in Asia on Tuesday as investors stepped in to buy, attracted to the higher yields seen in the wake of a recent sell-off.
Buying by Asian players was helping give a boost to Treasuries, said a trader for a US brokerage in Tokyo.
"I think some accounts that weren't involved in yesterday's price action are coming in to buy after a massive sell-off on Friday," the trader said, noting that Tokyo-based players had been away on Monday for a Japanese public holiday.
Ten-year Treasuries rose around 6/32 in price to yield 1.821 percent, down 2 basis points from late US trade on Monday.
The 10-year yield had hit a four-month high of 1.894 percent on Friday as investors dumped safe haven debt and flocked to risky assets after the Federal Reserve launched a new round of aggressive monetary stimulus. The Fed said on Thursday it would buy $40 billion in mortgage-backed securities each month until it saw a sustained upturn in the jobs market.
While the 10-year yield has since slipped off that high, it still remains roughly 28 basis points above a one-month low of 1.542 percent hit in early September.
Some investors expect the 10-year yield to move in a range of 1.5 percent to 2.0 percent until the end of the year, and more buying is likely to emerge if the 10-year yield rises toward 2.0 percent, the trader for a US brokerage said.
"Definitely there's a lot of cash to put to work. But I think people are anxious to try to get the best entry level going into the last quarter," he added.
Based on the outlook for the US economy and jobs market, it is hard to think that the 10-year yield will see a sustained break above 2.0 percent in the near term, said Shinichiro Kadota, a strategist for Barclays Securities in Tokyo.
"With the fiscal cliff coming up around the year-end, it doesn't look like we're in a situation where employment will recover strongly," he said, referring to looming US budget cuts and tax hikes that could come into effect unless the White House and Congress take action to avert them.
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