US bond yields up in Asia

TOKYO: The yield on benchmark Treasuries inched higher in Asia on Thursday as solid US manufacturing data eased concerns about growth, though activity was subdued ahead of key jobs data later in the week.

The 10-year Treasury yield climbed to 1.84 percent from 1.83 percent in late US trade on Wednesday.

The Institute for Supply Management said on Wednesday that its index of US national factory activity rose to 54.1 in January, the strongest pace in seven months.

The ADP National Employment Report showed the private sector added 170,000 jobs last month, the smallest gain in three months but in line with forecasts.

The US government labour market report is due on Friday. The yield on 30-year Treasuries climbed marginally to 3.01 percent from 3.0 percent in US trading.

The five-year yield was also up at 0.73 percent from 0.72 percent, but stayed near its lowest levels since at least the 1960s.

"The US data was solid and prospects are growing for a Greece debt agreement this week, which spurred some recovery in risk appetite and weighed on Treasuries, a trend which is carrying over into Asian session," said Shinichiro Kadota, a strategist at Barclays Capital in Tokyo.

Greece was nearing a deal on the long-awaited debt swap with its private bond holders and to secure a bailout from global lenders to avoid a default.

Bankers said the bond swap deal, which will mean real losses of about 70 percent for Greek bond holders, is essentially done. But the second bailout and any official sector participation must be agreed before announcing a deal as all elements are interlinked.

Yields on Portuguese, Spanish and Italian sovereign debt fell while thawing tension helped ease interbank lending rates in Europe, thanks to the European Central Bank's commitment to keep abundant funds in the system.

Friday's US jobs data will be key in gauging the strength of the recovery in the world's largest economy, with analysts forecasting the labour market will continue to improve moderately.

Copyright Reuters, 2012