TREASURIES-Inch up, curve flattens after Bernanke

TOKYO, July 22 (BestGrowthStock) – U.S. 10-year Treasuries inched up
on Thursday in the wake of Federal Reserve Chairman Ben
Bernanke’s comments that the economy faced “unusually uncertain”
prospects, keeping the 10-year yield near a 15-month low.

* The two-year yield briefly matched a record trough hit the
previous day, while the two-year/10-year yield spread narrowed by
nearly 2 basis points to 230.7 basis points, the tightest in 10
months.

* While there is some caution ahead of Europe’s bank stress
tests due on Friday, the 10-year yield seems likely to stay on a
downward trend following its breach on Wednesday of a previous
low hit in early July, said Tomohisa Fujiki, interest rate
strategist at BNP Paribas Securities. [ID:nLDE6601T6]

* The 10-year yield may eventually drop towards 2.7 percent,
Fujiki said, adding that Treasury yields could edge lower in the
near term if data on existing home sales comes in weak.

* Before the 2.7 percent level, 10-year Treasuries may face
resistance near 2.79 percent, which is roughly a 61.8 percent
retracement of the December 2008 to April 2010 sell-off that
pushed the 10-year yield up to 4.013 percent from 2.040 percent.

* U.S. 10-year Treasury notes rose 4/32 in price to yield
2.868 percent (US10YT=RR: ), down about 2 basis points on the day,
and not far from a 15-month low of 2.855 percent hit on
Wednesday.

* Two-year notes were unchanged in price to yield 0.5601
percent (US2YT=RR: ), down a tad from 0.565 percent in late U.S.
trading on Wednesday. The two-year yield briefly dipped as low as
0.556 percent, matching a record low hit on Wednesday.

* U.S. Treasuries had rallied on Wednesday after Bernanke
said the economy faced “unusually uncertain” prospects,
suggesting low inflation and low interest rates for a long time.

Stock Market Today

(Reporting by Masayuki Kitano; Editing by Joseph Radford)

TREASURIES-Inch up, curve flattens after Bernanke