TREASURIES-Edge up in Asia on bargain hunting, auction eyed
TOKYO, Oct 27 (Reuters) - U.S. Treasuries edged up in Asia onTuesday led by bargain hunting after the benchmark yield hit atwo-month high the previous day, but gains in prices were limiteddue to caution before a two-year Treasury note auction.
* Falls in Asian shares added support for the U.S. governmentdebt market, with Tokyo's Nikkei average .N225 slipping 1.5percent and the MSCI index of Asia stocks excluding Japan.MSCIAPJ down 1.1 percent. U.S. stock futures SPc1 DJc1were also down, indicating a weak start on Wall Street later inthe day.
* Growing speculation that the Federal Reserve may signaltighter policy down the road have led to a bond sell-off. Anactual interest rate increase by the Fed has still a way to go,but the market is keen to know whether there will be any changesin the Fed's statement at its policy meeting next week, dealerssaid.
* "Treasury market sentiment is expected to stay weak thisweek on speculation about the U.S. exit strategy debate and U.S.economic growth data, which is likely to show the economy is on arecovery path," said Yasutoshi Nagai, chief economist at DaiwaSecurities SMBC.
* U.S. third-quarter gross domestic product data is due onThursday and economists forecast a 3.3 percent expansion from a0.7 percent contraction the previous quarter. [ID:nN26185389]
* The U.S. Treasury will offer $44 billion of two-year noteson Tuesday, followed by $41 billion in five-year debt onWednesday and $31 billion in seven-year notes on Thursday.[ID:nN22432166]
* T-note futures edged up 2.5/32 to 117-05/32 TYv1 andbenchmark 10-year notes inched higher 2/32 in price to yield3.547 percent US10YT=RR, down about one basis point from lateU.S. trade on Monday.
* Thirty-year bonds rose 2/32 in price to yield 4.359 percentUS30YT=RR, while and two-year notes were steady in price toyield 1.021 percent US2YT=RR.
* For market incentives later on Tuesday, the S&PCase/Shiller home price index for August due at 1300 GMT isexpected to show a rise of 0.7 percent after a 1.6 percent risethe previous month. The Conference Board's report on consumerconfidence for October, due at 1400 GMT, is forecast to show areading of 53.1, unchanged from September. ECONUS (Reporting by Kaori Kaneko)
Source: Reuters
