Tuesday, 16 October 2012 09:10
SINGAPORE: The US 10-year Treasury yield held steady within a recent range on Tuesday, as investors awaited the November US presidential election and further clarity on when Spain may ask for a rescue package.
Ten-year Treasuries fetched an yield of 1.668 percent . Since late September, the 10-year yield has moved in a range of roughly 1.600 percent to 1.750 percent.
"You have to consider whether forthcoming events might trigger a rise in volatility, or whether traders will think instead that the market will have a hard time moving ahead of them," said a trader for a US brokerage house in Tokyo, referring to factors such as the Nov. 6 presidential election and the uncertainty over Spain's plans to seek aid.
"For now, the current level of the 10-year yield around 1.65 percent to 1.7 percent seems to be a very comfortable level for the market," he added.
Another factor to keep an eye on is market positioning, the trader said. If long positions in Treasuries start to accumulate that could leave the market susceptible to a sell-off, he said. The trader added, however, that there was little sign of such stretched market positioning at this point.
Worries about the US "fiscal cliff" of expiring tax cuts and spending cuts that loom for early next year, have stirred concern about the outlook for the US economy and helped lend support to Treasuries.
Copyright Reuters, 2012