TOKYO: US Treasuries prices dipped in Asia on profit taking on Tuesday after a surge following Federal Reserve Chairman Ben Bernanke's speech that increased expectations of further stimulus measures later this month.
Treasuries succumbed to profit-taking in their first Asian trading after Bernanke's speech on Friday. The market was closed on Monday for the US Labor Day holiday.
Although Bernanke stopped short of a clear signal of an imminent action, he said high employment is a "grave concern", boosting expectations that the Fed could announce some form of asset purchase programme.
The 10-year yield initially fell to 1.542 percent , its lowest level in nearly a month, but quickly bounced back to around 1.571 percent on profit-taking.
Some traders also think expectations of QE3 could be scaled back if Friday's employment data points to solid job growth. Economists expect an increase of 125,000 jobs.
"My view is that if there is a job growth of about 100,000, the Fed will probably choose not to start QE3," said a trader at a Japanese bank.
"I doubt they can start QE when stock prices are already pretty high. Easing at this point could be criticised as intended to support President Barack Obama as (Republican presidential candidate Mitt) Romney has openly said he would not reappoint Bernanke," the trader added.
Comments
Comments are closed for this article.