TREASURIES-Steady in Asia, uncertainty in Europe clouds outlook

HONG KONG, May 3 (BestGrowthStock) – U.S. Treasuries held on to
Friday’s gains in thin trade in Asia on Monday as China’s
latest moves to cool its economy and uncertainty in Europe
clouded the near-term outlook for the global economy.

* Euro zone policymakers kickstarted a 110 billion euro
($147 billion) bailout for Greece on Sunday. But the plan has
yet to obtain parliamentary approvals and hinges on Athens’
ability to deliver on severe austerity measures.
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* Despite the biggest-ever emergency aid for a country, DBS
said concern over the stability of other highly indebted
European countries would keep investors wary and prompt them to
buy safe-haven investments such as U.S. Treasuries.

* “U.S. Treasuries will continue to benefit and we continue
to expect the Treasury curve to bull-flatten in the near-term
until realignment with improving economic fundamentals causes a
bearish resteepening in the third quarter of 2010,” DBS said.

* Volumes are thin as markets in Japan and China are closed
for public holidays.

* Bond-friendly U.S. data on Friday showed the world’s
largest economy expanded for a third consecutive quarter but at
a slower-than-expected rate, supporting the view that the
Federal Reserve will not raise rates untl 2011

Traders will now focus on the April non-farm report in the
U.S. data calendar this week to monitor whether job growth in
March was sustained in April.

* The spread between two-year and 10-year note yields was
at 269 basis points, its lowest since late March, and not far
from a record peak of 290 basis points hit in late February.

* 10-year Treasuries (US10YT=RR: ) edged higher by 1/64 to
99-47/64, with yields softening to 3.657 percent. T-note
futures were down by nearly a fifth of a point at 117-23/32
(TYv1: ).

* Two-year notes (US2YT=RR: ) held steady at six-week lows of
0.96 percent while the 30-year bond (US30YT=RR: ) was flat at
101-22/64 to yield 4.521 percent.

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TREASURIES-Steady in Asia, uncertainty in Europe clouds outlook