US bonds edge down in Asian market

TOKYO: Treasuries edged down in Asia on Friday, as market participants locked in gains after an overnight rally following a strong 7-year auction.

The auction drew the highest demand from investors and direct bidders since the maturity was reintroduced three years ago, forcing those who were unable to buy at the auction to cover positions by buying in the open market.

"There was a lot of short-covering after the auction and this pushed up prices a lot, but that ran its course and prices steadied in Asia," said a trader at a Japanese brokerage.

The Federal Reserve's "Operation Twist" stimulus programme aimed at pushing down long-term interest rates is also expected to keep the 10-year yield steady at around 2 percent in the coming weeks, the trader said.

The yield on the 10-year note percent rose to 2.00 from 1.98 percent in late US trade, but was still below 2.02 percent in Asia on Thursday.

The yield on 30-year Treasuries inched down to 3.14 percent from 3.13 percent in US trading, but remained far below the 3.16 seen in Asia on Thursday.

US data on Thursday undermined demand for safe-haven assets, with new claims for jobless benefits last week holding at their lowest level since the early days of the 2007-2009 recession, and December home prices rising 0.7 percent.

"As long as the Fed seems committed to keeping rates low through 2014, the market seems to be shrugging off good economic data," the trader said.

Copyright Reuters, 2012