LONDON: US bond prices edged lower on Friday after a Le Monde newspaper report cited unnamed sources as saying the European bailout fund and the European Central Bank are preparing coordinated action on markets to support Spain and Italy.
* Trading was choppy in thin volumes. Treasuries started the European session lower after a pledge by ECB President Mario Draghi on Thursday to do whatever it takes within the bank's mandate to save the euro, including tackling high bond yields.
* US bond prices briefly erased their losses after the German central bank said ECB bond purchases would set wrong incentives, but the Le Monde article pushed them lower again.
* T-note futures were 6/32 lower at 134-26/32. US 10-year T-note yields were 1 basis point higher at 1.4477, not far from a record low near 1.38 percent hit earlier this week.
* "Le Monde is the main driver there," one trader. "Markets are expecting a potential move from the ECB again."
* The ECB meets next week to discuss its next monetary policy move and the trader said the minimum markets expect was a further cut in its refinancing rate from the current record low of 0.75 percent.
* Little action, if any, is expected at the US Federal Reserve's policy meeting on July 31-Aug. 1. Some economists think the Fed could push further into the future its conditional pledge to keep rates near zero through late 2014.
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