LONDON: US government bond yields edged down on Friday as investors preferred to hold safe haven assets before a last-chance round of negotiations to avoid a fiscal crisis next year.
President Barack Obama and lawmakers plan another round of talks before a New Year's deadline to prevent the economy from facing a "fiscal cliff" of tax hikes and spending cuts that economists fear could tip the United States back into recession.
Lawmakers were divided on the odds of success, with a few expressing hope, some talking as if they had abandoned it and a small but growing number suggesting Congress might try to stretch the deadline into the first two days of January.
"(The fiscal cliff) is the only game in town," one trader said. "They have a meeting today and nobody knows what's going to happen ... so you have to stay reasonably risk averse."
Ten-year T-note yields were last 1 basis point lower at 1.7234 percent.
Although thin volumes raised questions about the validity of the signal, a dip below the 200-day moving average in 10-year yields - last at 1.7450 percent - could point to further falls, some traders said.
Center>Copyright Reuters, 2012