SINGAPORE: The US 10-year Treasury yield eased on Tuesday in thin year-end trade, and was seen unlikely to rise too sharply in coming weeks due to the potential for bargain hunting interest from investors.
The 10-year Treasury yield last stood at 2.019 percent , down roughly 1 basis point from late US trade on Friday. Trade was closed on Monday in observance of Christmas Day on Sunday.
Investor jitters over the euro zone's sovereign debt crisis have lent support to Treasuries this month even as some data suggested that the US economy's recovery was picking up steam.
One near-term risk for Treasuries is the potential for long liquidation, since some market players may still have long positions related to a series of auctions that took place in mid-December, said a portfolio manager for a major Japanese bank in Tokyo.
Still, investors are probably looking for opportunities to buy US Treasuries on dips and that should help temper any rise in the 10-year yield, regardless of how US economic data next week turns out, he said.
"If you take a very short-term view, it wouldn't be a surprise if we see some good US economic data into around the first quarter of next year," the portfolio manager said.
"But I think market players are sceptical that such numbers will create expectations for the economy to head toward a self-sustaining recovery," he said.
Unless market players turn bullish on the US economy's outlook for 2013, they will probably view any rise in US Treasury yields during the first half of 2012 as a "golden buying opportunity", the portfolio manager said.
At the most, the 10-year yield may rise toward the late October peak of 2.42 percent over the next several weeks, he said. Lower down, another support level lies roughly around 2.15 percent, he added.
A batch of US indicators are coming up next week, including the Institute for Supply Management's surveys on factory activity and the services sector, as well as closely watched data on nonfarm payrolls.
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