10-year notes hold steady in Asia

TOKYO: US 10-year Treasuries prices were steady in Asian trade on Wednesday, as US fiscal talks dragged on.

President Barack Obama proposed on Tuesday that tax rates could be lowered in 2013 with a broad US tax code overhaul, but maintained rates for the wealthiest must rise.

Republican leaders kicked two of the most conservative members off the House Budget Committee on Tuesday, which was perceived as a move to advance a deal with Democrats to cut the federal deficit.

"The US talks aren't showing new progress, and until some conclusion is reached, yields will stick to their recent ranges," said a fixed-income fund manager at a Japanese asset management firm.

Benchmark yields lost seven basis points last month, their largest monthly fall since July, as fears about the fiscal impasse added to the appeal of bonds.

Treasuries prices held steady despite a rise in risk appetite across the region as Chinese equities surged. New Communist Party chief Xi Jinping said late on Tuesday that the government aimed to stabilise exports and make policies more targeted and effective.

Yields on 10-year Treasuries inched down to 1.614 percent on Wednesday in Asian trade from 1.615 percent in late US trade on Tuesday.

On Tuesday, primary dealers submitted a smaller-than-usual 4.047 billion in bonds for the US central bank to buy. The Federal Reserve's subsequent $1.837 billion purchase of Treasuries maturing February 2036 to November 2042 caused these dealers, who do business directly with the Fed, to scramble for longer-dated issues on the open market, traders and analysts said.

Yields on 30-year Treasuries rose slightly to 2.793 percent from 2.786 percent on Tuesday.

The Fed has been buying a combined $85 billion in Treasuries and mortgage-backed securities a month, with the latter as part of its "Operation Twist" stimulus program that expires at the end of this month.

Central bank policy-makers will meet next Tuesday and Wednesday, and are expected to consider whether to pursue further bond purchases.