Business & Finance

US bond yields fall, seen rangebound until September

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"Asian equity markets took a bit of a dip this morning on the back of disappointing Japanese Q2 GDP figures, and that's given a bit of a lift to Treasuries," Nick Stamenkovic, bond strategist at RIA Capital Markets said.

Japan's economy expanded just 0.3 percent in April-June, half the pace expected. Trade data on Friday showed China's July exports grew a mere 1 percent - well below the consensus call for growth of 8.6 percent.

The data raised concerns about global growth a day before the euro zone, mired in a three-year-old debt crisis - releases its own gross domestic product data for the second quarter.

US retail sales data on Tuesday will provide the latest insight into the health of the world's largest economy.

More signs of weakness could spur expectations for further US central bank action after two officials came out strongly last week for new steps to stimulate the economy, including San Francisco Fed chief John Williams, whose comments were published after Friday's market close.

But some in the market expected Treasury prices to remain rangebound until more information was provided on the ECB's intervention plans.  * ECB President Mario Draghi indicated earlier this month the central bank may again start buying government bonds to reduce crippling Spanish and Italian borrowing costs but not before September - and only if governments activated the euro zone's bailout funds to join the ECB in buying bonds.

* "I would say that we will bounce around in the 1.55-1.70 (percent) range (on the 10-year yield) for the next few weeks until we get something more definitive out of Europe and also on the data that is coming out of China and see how they are going to go about addressing their slowdown as well," a trader said.

Copyright Reuters, 2012