HONG KONG: Most US Treasury debt prices were steady on Monday in Asia as traders bet Chairman Ben Bernanke's comments later in the day may suggest that a Fed rate increase will not happen this year.
Bernanke is expected to reinforce the view of New York Fed President William Dudley who said on Friday it is too early for the central bank to raise interest rates even though the US economy is on a firmer footing. The Fed chairman is schedule to speak at an event at 2315 GMT. See
Trading volume was light with most of buying in short and intermediate issues. Prices retreated from their initial gains as a post-payroll bounce that stared in New York on Friday tapered off.
Ten-year June treasury futures were flat at 118-31/32 after hitting a three-week low last week. It reached a high of 119-4/32 in earlier trading.
A recent spate of tough inflation remarks from several Fed officials have stoked anxiety that the Fed might even raise rates by year-end, much earlier than economists have been predicting.
"We have all heard from the hawks for awhile. Now we have the doves' turn. It will be more of a balanced debate," said Annette Beacher, head of Asia-Pac research with TD Securities in Singapore.
Concerns about hawkishness in the Fed's stance were aggravated by data on Friday which showed a surprise dip in the unemployment rate, while high oil and food prices appeared to back their view. There are no major US data releases scheduled for Monday.
A widely expected rate increase from the European Central Bank on Thursday, its first since 2008, has also spurred concerns the Fed will not be far behind in tightening monetary policy.
Prior the Bernanke, two regional Fed presidents will make public appearances. Atlanta Fed chief Dennis Lockhart will speak on the economy at 1305 GMT, while the head of the Chicago Fed Charles Evans will discuss financial literacy at 1330 GMT and the economy on CNBC television at 1915 GMT.
Two-year cash Treasury debt prices notched up 1/32 for a yield of 0.79 percent after testing support at 0.89 percent on Friday, the highest level since last May. The two-year yield finished lower on Friday after Dudley's remarks.
Benchmark 10-year cash Treasury note yield was at 3.45 percent in late Asian trading, flat from late Friday in New York.
Asian shares took cue from the rise on Wall Street on Friday in response to an upbeat payroll report, curbing a bid for bonds. The MSCI Asia-Pacific ex-Japan stock index advanced for a fifth straight session, up 0.7 percent on the day, while Japan's benchmark Nikkei average closed up 0.1 percent. As for US shares, S&P e-mini futures were unchanged.
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