TREASURIES-Slip in Asia as equities rise

By Masayuki Kitano

TOKYO, July 9 (Reuters) - U.S. Treasuries dipped in Asian trading on Wednesday as regional stock markets rose, triggering some selling of safe haven government debt.

Treasuries have rallied over the past month as investors pared expectations for the Federal Reserve to raise interest rates in coming months due to concerns about the economic outlook and ongoing strains in credit markets.

But short-term Treasuries dipped on Tuesday as share prices rose due to a pullback in oil prices and after Fed Chairman Ben Bernanke said in a speech that he may keep open a lifeline for Wall Street firms past year-end. [US/]

The director of the top regulator of mortgage finance providers Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research) on Tuesday asserted that an accounting rule change should not drive a capital change at government-sponsored entities like Fannie and Freddie [ID:nN08371498]. That lifted the hard-hit shares of those firms, crimping the bid for government debt.

Treasuries could face more pressure if oil prices retreat further and ease worries about the impact on consumer spending, said Yasutoshi Nagai, chief economist for Daiwa Securities SMBC.

"One key is the outlook for oil prices. I get the sense that they may be close to peaking out," Nagai said.

"If that turns out to be the case, the economy should improve," he said.

While Treasury yields are unlikely to break sharply above their recent trading ranges soon, the benchmark 10-year yield could rise towards 4.3 percent over the next month, Nagai said.