TOKYO: US Treasuries were little changed in Asia on Monday after gaining on subdued inflation data last week, with investors cautious about chasing prices higher as the 10-year yield is already near three-week lows.
The core US consumer price index, watched by the US Federal Bank as a guide to monetary policy, edged up 0.1 percent in March after climbing 0.2 percent in February, below market expectations for a rise of 0.2 percent, easing worries about imminent inflation.
Ten-year notes yielded 3.419 percent, compared to 3.414 percent at the end of last week. Ten-year debt has been facing resistance at a yield of 3.40 percent for the past three weeks.
Japanese investors tend to pour fresh money onto US bonds in April at the beginning of their new financial year but this year they seem less active than usual probably due to the country's disaster last month, said Tomoaki Shishido, an analyst at Nomura Securities. They have been net buyers of foreign bonds in five of the past six years in April.
But Shishido also said that the market is supported by the perception that US economic growth in recent months may be much less strong than market players had initially expected. "I cannot rule out the possibility that the 10-year yield will fall to around 3.25 percent," he added.
Economists have steadily lowered growth forecasts as first-quarter data has come in, including soft readings on US retail sales and the trade deficit earlier this month.
On the other hand, some market players, such as Lou Crandall, chief economist at Wrightson ICAP, think the downgrades to US Q1 GDP forecasts do not reflect the true economic picture.
Crandall notes that a number of indicators have showed accelerating growth in Q1, including Friday's industrial production report putting the annualised growth rate of manufacturing output at a 13-year high of 9.1 percent.
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