TREASURIES-U.S. bonds steady as market seeks direction

* Traders look for direction as earthquake-related gains fade

* Analysts see U.S. yields heading up in the long term

* Geopolitical risks seen keeping lid on yields in the short run

* U.S. yield curve little changed after recent flattening

By Richard Leong

HONG KONG, March 25 (Reuters) – U.S. Treasury prices were little changed on
Friday as traders assessed whether the latest investor flight to safe haven
assets was abating, with yields hovering at their highest in two weeks.

* Japan’s devastating earthquake and tsunami, turmoil in Libya and the
Middle East and Europe’s festering sovereign debt troubles have kept investors
wary of riskier assets and supported a move into debt markets. However, there
has been a growing consensus that these events will not push the world into
another recession for now.

* Attention has gradually shifted back to global inflation from surging oil
and food prices, the United States’ hefty $1.5 trillion deficit and the
likelihood that the Federal Reserve will begin to remove the unprecedented
policy accommodation later this year. Analysts cited these factors as long-run
negatives for Treasuries.

* Geopolitical events could still cause intermittent bouts of safety bids
for Treasuries in the near term, but yields are poised to rise longer term, as
risk appetite has returned and investors once again favor stocks and
higher-yielding assets.

* “These conflicting sets of data, risks and outlook make for a market
unlikely to find a significant directional trend near term, although tactically
we’d be better sellers of strength at current levels,” Credit Suisse strategists
wrote in a research report.

* The government will release its final reading on Q4 gross domestic product
(GDP), which analysts forecast likely was upgraded to 3.0 percent from 2.8
percent. For more on U.S. data forecasts, click on

* Thomson Reuters and University of Michigan will report on their final
March figures on U.S. consumer sentiment. The initial March reading on the
headline index fell to 68.2, a five-month low, as a result of lofty gasoline
prices. Further erosion in consumer confidence could rein spending and slow
economic growth. The consumer sector accounts for nearly 70 percent of the U.S.
economy.

* The MSCI Asia-Pacific ex-Japan index was up 0.95 percent,
while Japanese stocks were up 1.0 percent. As for U.S. shares, S&P
e-mini futures were up 0.29 percent.

* June 10-year T-note futures were up 2/32 at 119-18/32, the lowest
since March 10 before the Japan quake and tsunami.

* Benchmark 10-year cash Treasury notes were up 2/32 in price to yield 3.40
percent, down nearly 1 basis point from late Thursday. The 10-year yield matched
the closing level of two weeks ago after touching three-month low of 3.14
percent last week.

* The 10-year to 30-year part of the U.S. yield curve was a tad flatter than
late Thursday at 107 basis points after hitting a seven-week wide 118 basis
points last week.

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(Reporting by Richard Leong; Editing by Kim Coghill)

TREASURIES-U.S. bonds steady as market seeks direction