TREASURIES-Rise in Asia on short covering, sale eyed

TOKYO, Dec 29 (BestGrowthStock) – U.S. Treasuries inched higher in
Asia on Wednesday on short covering after a jump in yields
following a dismal auction result the previous day, but investors
remained cautious before another tender later in the day.

* The benchmark 10-year note rose 10/32 in price to yield
3.452 percent, down about 4 basis points (US10YT=RR: ) from late
U.S. trade on Tuesday. It is still well below a 7-month high of
3.57 percent hit earlier this month.

* The five-year note yielded 2.168 percent (US5YT=RR: ), little
changed from 2.16 percent quoted after the auction on Tuesday,
which was the highest level since May.

* The yield rise as a result of Tuesday’s dismal auction of
$35 billion five-year note could turn favourable for the $29
billion seven-year note auction set for later on Wednesday.

* “Treasuries in Asia are up on short-covering in thin trade
as yields jumped after the auction on Tuesday,” said an analyst
at a foreign securities firm in Tokyo.

* “Given the rise in yields, I expect the seven-year note
offering to draw more decent demand than for five-year notes.
There is also support from institutional investors who see
current price levels in this sector as relatively good levels,”
he said.

* Seven-year notes (US7YT=RR: ) were up 6/32 in price to yield
2.8508 percent, down about 3 basis points. Seven-year notes are
having their worst month since the Treasury began issuing the
notes in the spring of 2009, with their yields rising 0.69
percent.

* The notes traded at yields of 2.881 percent in the
“when-issued” market (US7YTWI=TWEB: ), which indicates where
traders expect the new debt to price, down slightly from 2.91
percent late on Tuesday.

* Bond yields have soared this month on expectations for
accelerating economic growth in 2011 as well as concerns over the
U.S. deficit.

* T-note futures (TYv1: ) inched up 3.5/32 in price to
119-4.5/32.
(Reporting by Chikako Mogi; Editing by Chris Gallagher)

TREASURIES-Rise in Asia on short covering, sale eyed