TOKYO: US Treasuries held firm in Asia on Monday, retaining their strength after dismal jobs data added to worries that the US economy's soft patch could drag on, though concerns about lack of progress in talks on spending cuts could limit gains.
Jobs growth ground to a near halt in June as employers hired the fewest workers in nine months and the unemployment rate climbed to a six-month high of 9.2 percent, the data showed on Friday.
"The jobs data suggests something more than temporary weakness in the economy. The jobless rate rose even as labour participation fell. If participation were at the same level as last year, the jobless rate would have been above 10 percent," said Arihiro Nagata, manager of foreign bond trading at Sumitomo Mitsui Banking Corp.
The jobs data was so disappointing that some market players were speculating lawmakers may be less likely to push through harsh spending cuts.
Still, many market players think any deal on deficit reduction and the debt ceiling will come only at the last minute ahead of Aug. 2, when the US Treasury is expected to run out of funding options.
While many investors expect Congress to eventually raise the debt limit, the uncertainty could sap investor appetite.
President Barack Obama and Republican leaders failed on Sunday to mend rifts over tax increases and social spending cuts in talks aimed at cutting the deficit and averting a debt default.
More talks are scheduled for Monday and the White House said Obama would hold a news conference at 11 a.m. EDT (1500 GMT) before reconvening with congressional leaders.
The yield on 10-year notes yield stood at 3.03 percent, little changed from late US levels. On Friday, the yield fell about 10 basis points following the jobs data.
Copyright Reuters, 2011
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