Treasuries edge lower in Asia ahead of U.S. data

TOKYO (BestGrowthStock) – U.S. Treasury debt prices inched down in Asia on Tuesday, though the benchmark yield stayed near a 17-month low, but activity was limited as market players awaited economic data later in the day for more clues on the health of the economy.

The Federal Reserve on Tuesday will make the first of its purchases of Treasuries in a programme announced last week that will use funding from maturing mortgage assets to buy U.S. government debt.

The Treasury market tends to be more influenced by weak data at the moment as recent indicators, including Monday’s report on regional business activity, have fanned fears about the outlook of the U.S. economy, analysts said.

The government will release reports on producer prices and housing starts/building permits for July, both at 1230 GMT. The Fed’s data on industrial production for the same month is due at 1315 GMT.

“Weaker-than-expected data will likely push yields down further and the market is expected to press the U.S. central bank to take fresh steps,” a strategist at a foreign securities firm said.

Benchmark 10-year notes fell 8/32 in price to yield 2.598 percent, up about 3 basis points on the day but staying within sight of a 17-month low of 2.563 percent hit on Monday.

Thirty-year notes fell 11/32 in price to yield 3.736 percent and September T-note futures were down 8/32 at 125-30.5/32.

The spread between the 10- and 30-year Treasury yields tightened to around 114 basis points, about 10 basis points below a record peak near 124 basis points struck last week.

The United States recorded a net capital outflow in June for the first time in five months, the Treasury Department said on Monday. China trimmed its holdings of U.S. government bonds for a second straight month. But Japan, the second-largest holder of Treasuries, increased its holdings.

(Reporting by Kaori Kaneko; Editing by Chris Gallagher)

Treasuries edge lower in Asia ahead of U.S. data