US bonds edge lower on hopes for boosted bailout fund

TOKYO: US Treasuries edged lower in Asia on Tuesday as a report that Europe is mulling boosting its bailout fund prompted short-covering in riskier assets.

Euro zone officials are working to magnify the firepower of the region's rescue fund, European Central Bank policymakers said on Monday, while US President Barack Obama piled on pressure for Europe to staunch a sovereign debt crisis that threatens the world economy.

Traders said the fall in prices could be short-lived as serious doubts persist over policymakers' ability to craft a plan to deal with the crisis, given their history of bickering since Greece's debt problems erupted in 2009.

There is plenty of upside risk this week with the Greek government voting on Tuesday on new austerity measures needed to secure aid. Finland and Germany vote later this week on the earlier EFSF structure.

Ten-year notes dipped 1.5/32 in price to yield 1.907 percent , compared to 1.904 percent on Monday and higher than the more-than-60-year low of 1.674 percent hit last week.

Traders said they will closely watch a two-year note auction by the Treasury Department at 1 p.m. (1700 GMT) and will listen in to Dallas Fed President Richard Fisher speaking on why he voted against "Operation Twist" at 1:20 p.m. (1720 GMT).

Copyright Reuters, 2011