TREASURIES-Rise in Asia, but auction, Bernanke eyed
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2/24/10TOKYO (Reuters) – U.S. Treasuries edged up in Asia on Thursday but gains were limited as investors braced for a seven-year note auction and another testimony from Federal Reserve Chairman Ben Bernanke.
* The sale of $32 billion worth of seven-year notes on Thursday will round out this week’s record auction of $126 billion of debt after the poor results of a five-year note auction on Wednesday offset bond-positive comments from Bernanke.
* Bernanke said in congressional testimony on Wednesday that a weak job market and tame inflation warrant low interest rates for “an extended period”, curbing speculation the central bank was moving close to raising borrowing costs. [ID:nN23153536]
* “The comments from Bernanke were largely in line with the market’s understanding, so they gave relief to the market,” said Jun Kato, senior chief analyst at Shinkin Central Bank Research Institute.
* Bernanke is scheduled to give another testimony before the Senate Banking Committee on Thursday. This is likely to be similar to the one he made on Wednesday and market participants will focus on a question and answer session, analysts said. [FED/DIARY]
“It is obvious that U.S. housing and jobs markets have not shown much recovery and its consumer confidence has worsened. So, it is market consensus that the Fed raising interest rates is still far off,” Kato said. “Bernanke will probably avoid mentioning the timing of a rate hike.”
* Ongoing worries about debt-laden Greece will likely continue to underpin the U.S. Treasury market, analysts said. Standard and Poor’s may downgrade Greece’s BBB+ rating by one or two notches within a month, the agency said on Wednesday, citing downside risks to growth that could hinder the country’s deficit-cutting plan.
* The benchmark 10-year note edged up 3/32 in price to yield 3.682 percent US10YT=RR, down one basis point from late U.S. trading on Wednesday. T-note futures were up 3.5/32 to 118-6/32 TYv1.
* Two-year notes US2YT=RR were steady in price to yield 0.859 percent, while 30-year bonds US30YT=RR rose 6/32 in price to yield 4.624 percent, down one basis point.
* Data on U.S. durable goods for January will be released at 1330 GMT and economists expect a rise in orders of 1.5 percent versus a 1.0 percent rise in December. First-time claims for jobless benefits for the latest week will also be announced at the same time. ECONUS (Reporting by Kaori Kaneko; Editing by Joseph Radford)
