TOKYO: US Treasuries steadied in Asian trade on Thursday, staying below 13-month highs touched in the previous session, after solid demand at a five-year sale offset concerns that an improving economy will prompt the Federal Reserve to begin tapering its monetary stimulus.
The US central bank now buys about $85 billion in assets every month, and Fed Chairman Ben Bernanke said last week the central bank could decide whether to reduce that at one of its "next few meetings," depending on economic data.
His comments pushed up Treasury yields, but results of a five-year auction on Wednesday reassured investors that the higher yields have attracted buying interest.
The sale of $35 billion of five-year notes came at a high yield of 1.045 percent, close to market expectations.
The Treasury will next offer $29 billion in seven-year notes on Thursday.
The yield on the 10-year notes stood at 2.12 percent, steady from 2.11 percent in late US trading on Wednesday, a day on which it rose as high as 2.235 percent. That was its loftiest peak since April 2012.
The yield on 30-year notes was steady from late US trade at 3.26 percent, after rising as high as 3.37 percent on Wednesday.
Some market participants had expected the Bank of Japan's own massive monetary stimulus would pressure JGB yields and send Japanese investors in search of higher yields abroad.
But finance ministry data on Thursday showed they sold 1.117 trillion yen ($11.1 billion) worth of foreign bonds last week, the second straight week of net selling, as they resumed repatriating overseas investments.
"As JGB yields have risen, there is less incentive for Japanese investors to buy overseas debt. Volatility in the JGB market is keeping some buyers from actively buying over here, but that does not mean they are buying over there," said a fixed-income fund manager at a Japanese asset management firm.
BoJ Governor Haruhiko Kuroda told the upper house financial affairs committee on Thursday that the central bank will try to curb JGB market volatility as much as possible in order to apply strong downward pressure on long-term yields.
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