TREASURIES-Rise in Asia on bargain hunting, curve stays steep

TOKYO, Oct 18 (BestGrowthStock) – U.S. Treasuries edged up in Asia
on Monday on bargain hunting, although the yield curve remained
under steepening pressure due to the prospects of the Fed
creating inflation.

* Longer-dated Treasuries had fallen on Friday after Federal
Reserve Chairman Ben Bernanke raised expectations the Fed would
try to create inflation, setting the backdrop for bargain
hunting in Asia.

* The 30-year bond (US30YT=RR: ) gained 4/32 in price to yield
3.975 percent, down 1 basis point from late U.S. trade on
Friday. The yield momentarily edged above 4 percent on Friday to
touch a five-week high.

* The 10-year note (US10YT=RR: ) rose 3/32 in price to yield
2.546 percent, down about 1.5 basis points.

* Prospects for the Fed trying to create inflation are
expected to cap longer-dated Treasuries going forward. In his
most explicit signal yet, Bernanke said on Friday that the Fed
was likely to ease as soon as its next meeting in November.
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* The Fed’s embarking on a reflationary policy would make
holding 30-year bonds less attractive, since future inflation
would drive interest rates higher and erode their value.

* The rise in longer-dated yields has steepened the curve.
The 10-year/30-year yield spread hovered around a record high
above 140 basis points.
(Reporting by Shinichi Saoshiro; Editing by Edmund Klamann)

TREASURIES-Rise in Asia on bargain hunting, curve stays steep