TOKYO: Benchmark US Treasury bonds rose in Asia ahead of Federal Reserve Chairman Ben Bernanke's testimony before a congressional committee later on Thursday, as some investors bet he could hint at the possibility of more stimulus steps.
Fed Vice Chair Janet Yellen made a case for further easing monetary conditions late on Wednesday, saying "it may well be appropriate to insure against adverse shocks".
Regional Fed officials from Atlanta and San Francisco said earlier on Wednesday that they were prepared to take more policy steps to support the economy.
"At the end of the day, we all know what the Fed's bias is, and rightfully so, since there are significant downside risks still in the system," said a trader at a European brokerage in Tokyo.
"The Fed knows the US economy is in decent shape, but if Europe is slipping into minus growth, it doesn't matter what the US economy does, there's going to be headwinds," he said.
The yields on 10-year notes fell to 1.63 percent from 1.65 percent in late U.S trading, though they were still above 1.59 percent in Tokyo on Wednesday and well off their record low of 1.44 percent hit on Friday.
The yields on 30-year bonds were steady from late US trade at 2.72 percent, compared with 2.65 percent in Tokyo on Wednesday.
The US central bank's next policy meeting is scheduled for June 19-20, and will follow elections in Greece that could determine whether that country remains in the euro.
A fresh outbreak of European turmoil would give the Fed more reason to take action, either by extending its expiring "Operation Twist" stimulus program or by launching a third round of asset purchases.
Later Thursday, Spain will auction up to 2 billion euros ($2.5 billion) in medium- and long-term bonds, which will give markets the latest indication of how well that country is able to fund its debt.
European officials were considering various measures on Wednesday to prop up Spain's banks.
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