SINGAPORE: US 10-year Treasuries inched lower in Asia on Tuesday, but their losses were limited after data the previous day showed surprising weakness in the US manufacturing sector, adding to concerns about the economy's outlook.
Ten-year Treasuries dipped 3/32 in price to yield 1.597 percent, up roughly 1 basis point from late US trade on Monday.
Treasuries had rallied on Monday on data showing that US manufacturing shrank in June for the first time in nearly three years, a reading that provided a stark sign of the economic recovery's slowdown.
With investors worried about downside risks to economic growth both in the United States and globally, the 10-year yield could head lower if inflation expectations were to decline, said a trader for a European brokerage in Tokyo.
US jobs data on Friday could become the catalyst for such a move, the trader said. The 10-year yield may head lower if the jobs data comes in weak and heightens concern about the economy's outlook, he said.
"In that case, expected inflation could drop and trigger a fall in yields," he said, adding that the 10-year yield may head toward a record low of 1.44 percent hit on June 1 under that scenario.
In any event, the 10-year yield seems unlikely to climb back above 2.0 percent in the near term, given worries about downside risks to the global economy, the trader added.
The 10-year Treasury yield has been trading in a range of 1.56 percent to 1.73 percent since early June.
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