TREASURIES-Up in Asia after Germany bans naked short-selling

TOKYO, May 19 (BestGrowthStock) – U.S. Treasuries edged higher on
Wednesday as Germany’s ban on naked short sales of
euro-denominated government bonds and a slide in Asian equities
helped bolster demand for Treasuries as a safe haven.

* Asian stocks fell, with the Nikkei share average (.N225: )
hitting a three-month low and MSCI’s broad measure of Asian
stocks outside Japan falling more than 2 percent (.MIAPJ0000PUS: ).

* “Flight to quality buying helped the market,” said a trader
at a Japanese asset management firm. “But market players in Asia
are refraining from active trade, waiting to see European
markets’ reaction to Germany’s ban.”

* “When you look at U.S. economic fundamentals, Treasury
yields have already come down to too low, so further falls in the
yields may be limited,” he said.

* U.S. 10-year note futures rose 7.5/32 in price to 120-14/32
(TYv1: ).

* The benchmark 10-year Treasury note inched up 2/32 in price
to yield 3.346 percent, compared to 3.348 percent in late U.S.
trade on Tuesday. The 10-year yield dipped to as low as 3.322
percent earlier in Asian trading.

* Germany, in an attack on the financial speculation on which
it blames much of the euro zone’s debt crisis, announced on
Tuesday a ban on naked short sales of euro-denominated government
bonds, credit default swaps based on those bonds, and shares in
Germany’s 10 leading financial institutions. [ID:nN18512882]

* “Since this will hurt liquidity in Europe overall, there
are market players who are heading into markets that have
liquidity,” says a senior trader for a European brokerage, adding
that such concerns helped give Treasuries a boost.

* Market players said Germany’s decision to ban naked short
sales of euro-denominated government bonds was prompting some
Japanese brokers to avoid selling European debt during Asian
trading hours on Wednesday. [ID:nTOE64I02M]

* “What I have heard is that during Tokyo trading hours,
brokerages cannot give prices for trades that would involve
selling (of European bonds) by the brokerages,” said Junji
Kojima, senior deputy general manager at Sompo Japan Insurance’s
global securities investment department.

* The brokers apparently want to avoid taking orders to sell
to investors European bonds that they do not have in their
inventories, Kojima said, adding that the situation is likely to
normalise once European markets open.

Stock Research

(Reporting by Kaori Kaneko; Editing by Edwina Gibbs)

TREASURIES-Up in Asia after Germany bans naked short-selling