TOKYO: The yield on US 10-year Treasury notes was barely changed on Wednesday in Asia, staying away from a three-month low hit earlier in the week, supported by hopes of improved European bank funding.
The European Central Bank will offer low-cost, three-year funds to banks for the first time, and some investors hope that a large take-up of the funds will ease pressure on bank balance sheets and stem the sell-off in European sovereign debt.
Ten-year Treasuries edged down 1/32 in price to yield 1.9320 percent. On Monday, the yield hit 1.798 percent, marking its lowest level since October4.
"Several supportive factors temporarily relieved concerns that the euro zone debt crisis may deteriorate, but they are merely providing a one-off floor, with a real turnaround still nowhere near in sight," said Hirokazu Yuihama, senior strategist at Daiwa Capital Markets.
Treasuries have rallied recently, supported by nervousness over the euro zone's sovereign debt crisis, and as investors move to bolster balance sheets by buying low-risk assets heading into year-end.
US Treasuries are expected to shine even brighter in the first quarter of 2012, with the pressure on the euro zone bond market expected to rise. In the 17-nation area some 230 billion euros of bank bonds, up to 300 billion in government bonds, and more than 200 billion euros in collateralised debt are all maturing in that quarter.
The yield on 30-year bonds also stabilised at 2.93 percent after the bonds dropped three full points in price the day before on a move towards riskier assets.
The Treasury Department will sell $29 billion in seven-year notes at 1800 GMT. It saw firm demand for a sale for its $35 billion sale of new five-year notes on Tuesday, the second-last coupon auction of the year.
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