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TREASURIES- climb in Asia as stock market slide

Posted on: March 2, 2009


Reuters – Monday, March 2

* Bonds catch safe-haven bids as Asia stock markets slide

* Region’s stocks hit after Wall St’s sharp drop on Friday

* Supply still seen as a nagging concern for Treasuries

By Shinichi Saoshiro

TOKYO, March 2 – U.S. Treasuries rose in Asia on Monday, supported by safe-haven buying as the region’s stock markets slid broadly on the back of persisting worries over the global economy and financial system.

Tokyo’s Nikkei stock average <.N225> shed more than 3 percent and the MSCI index of Asia-Pacific stocks outside of Japan <.MIAPJ0000PUS> dropped 3.5 percent after Wall Street slid sharply on Friday after the U.S. government’s move to take a large stake in Citigroup’s common shares fanned fears it will increase its role in other banks. [.T] [.N]

Shorter maturities extended gains from Friday, when falling stocks drove flight-to-quality bids in mostly shorter-dated notes.

Longer-dated maturities had sagged on Friday due to fears of ballooning supply, as the market last week digested $94 billion in issuance –a record amount of debt auctioned in a week. The yield curve steepened on Friday as a result.

With participants bracing for the U.S. government to issue roughly $2 trillion of Treasuries this year to fund financial rescue efforts to swamp the nearly $6 trillion government debt market, analysts suggested that longer-dated maturities were more vulnerable to supply concerns and that the yield curve could eventually resume steepening.

“Treasuries have become relatively numb to bleak economic indicators and the yield curve could continue to steepen for now on concerns of worsening fiscal conditions,” said Yasutoshi Nagai, chief economist at Daiwa Securities SMBC.

Data due this week includes the manufacturing and non-manufacturing ISM indexes, factory orders and non-farm payrolls.

“The market may not react to the data unless the outcome surprises by being better than forecast, but that does not look likely considering current economic conditions,” Nagai at Daiwa Securities SMBC said.

Government data on Friday showed the U.S. economy shrank at at an annualised 6.2 percent in the October-December quarter to mark its biggest contraction since 1982. [ID:nN27328979]

The two-year note <US2YT=RR> gained 1/32 in price to yield 0.960 percent, down 2 basis points from late U.S. trade on Friday.

The benchmark 10-year note <US10YT=RR> climbed 7/32 in price to yield 2.992 percent, down 3 basis points.

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1 Response to "TREASURIES- climb in Asia as stock market slide"

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