Prices fall after rally, nervous before US data

TOKYO: US Treasury prices fell in Asia on Wednesday as profit-taking emerged after solid gains the previous day following Portugal's downgrade to junk status.

The market concentrated on squaring off positions following the rally, with many Asian investors refraining from trading actively ahead a series of US data, including closely watched jobs numbers on Friday.

"All focus is now on the jobs data. The direction of the Treasury market will be set by the outcome of the figures. Gains in yields will be pretty much capped if payroll figures come in line with expectations," said Yoshio Takahashi, a fixed income strategist at Barclays Capital in Tokyo.

Nonfarm payrolls are expected to have increased 90,000 in June, according to a Reuters survey, with the unemployment rate edging down to 9.0 percent.

The market is also looking out for ADP data, which is released a day before the nonfarm payrolls. Economists polled by Reuters offered a forecast of 68,000 jobs added to private sector payrolls in the ADP report.

Treasuries attracted safe-haven buying the previous day after Moody's Investors Service downgraded Portugal to Ba2 with a negative outlook from Baa1. It was Portugal's first downgrade into junk territory.

Ten-year Treasury notes fell 6/32 in price to yield around 3.141 percent, up about 2 basis points from late US trading on Tuesday.

Ten-year note futures fell 3.5/32 to 122-17.5/32.

Thirty-year T-bonds fell 11.5/32 in price to yield around 4.391 percent.

Copyright Reuters, 2011