July 10, 2012 / 6:44 AM / 7 years ago

TREASURIES-US 10-year notes edge up but supply caps gains

TOKYO, July 10 (Reuters) - U.S. 10-year Treasuries inched higher in Asian trade on Tuesday, supported by expectations that the U.S. Federal Reserve has more easing steps to come but gains were limited ahead of this week’s debt sales.

* The Treasury will sell $32 billion in three-year notes later on Tuesday.

That will be followed by $21 billion in 10-year debt on Wednesday and $13 billion in 30-year bonds on Thursday.

* The yield on benchmark 10-year Treasuries edged lower to 1.51 percent from 1.52 percent in late U.S. trade, and was down from 1.54 percent in Tokyo on Monday.

The 10-year yield hit a record low of 1.44 percent on June 1, down from around 2.40 percent as recently as March as fears about the impact of the European debt crisis prompted investors to seek safe-haven fixed-income assets.

* “The possibility of more U.S. easing remains, and that will give bonds some support, but nothing is decided and uncertainty could continue for the next few months,” said Tomoaki Shishido, bond analyst at Nomura Securities.

* Wall Street economists see a 70 percent chance the Fed will attempt to spur borrowing and demand with a third round of quantitative easing, or QE3, according to a Reuters poll conducted on Friday.

* China’s June trade data on Tuesday stoked anxiety about the strength of domestic demand in the world’s second biggest economy as imports rose at only half the pace expected — helping to dampen risk appetite and increase the appeal of bonds.

* The yield on 30-year bonds stood at 2.62 percent, steady from late U.S. trade on Monday.

* Investors awaited the minutes of the U.S. central bank’s meeting last month, scheduled for release on Wednesday.

At that meeting, policymakers decided to extend the “Operation Twist” stimulus programme through 2012. Under that programme, it buys long-term debt and sells short-term notes to fund the purchases with the aim of keeping down long-term rates.

The minutes could reveal the extent to which the Fed is leaning toward more easing steps, particularly in the wake of last week’s disappointing employment report.

The U.S. Labor Department said on Friday U.S. employers added 80,000 jobs in June, below the 90,000 predicted by economists polled by Reuters.

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