TOKYO: Treasuries edged up slightly in Asia on Monday on light short covering a day before the US Federal Reserve's one-day meeting, with fixed-income assets also getting a lift from bearish Chinese trade data.
The Federal Open Market Committee will meet on Tuesday, and some analysts say the Fed's policy-making group might agree on more bond purchases aimed at lowering mortgage rates and long-term borrowing costs.
Underpinning demand for bonds, China posted its largest trade deficit in at least a decade, fanning concerns that slowing exports from the world's second-largest economy will lead to lower fuel demand.
But supply concerns kept gains in check, as the US Treasury Department will sell $32 billion in three-year notes on Monday, $21 billion in 10-year debt on Tuesday and $13 billion in 30-year bonds on Wednesday.
"Yields have made an incremental move down, but there are no expectations that they will come off significantly, with everyone waiting to see whether or not the Fed is going to increase its purchases after the improved US jobs data," said a trader at a Japanese bank in Tokyo.
The US Labor Department said on Friday that US employers added more than 200,000 jobs for a third straight month.
The yield on the 10-year note was at 2.02 percent, down from 2.04 percent in late US trading on Friday.
The yield on 30-year Treasuries inched down to 3.17 percent from 3.19 percent in late US trading on Friday.
The yield on two-year Treasuries slipped to 0.317 percent from 0.322 percent in US trading on Friday, when it rose as high as 0.3257 percent - its highest level in more than seven months.
On Friday, the Fed sold $8.6 billion worth of short-dated notes from its holdings as a part of its $400 billion "Operation Twist" stimulus programme.
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