June 14 (Reuters) – U.S. Treasuries fell in Asia on Monday giving up some of the gains they made late last week, as regional stocks rose, curbing the safe-haven appeal of debt.
Bonds
* But losses were limited with many investors looking to this week’s economic data, including producer and consumer price numbers, for more clues on the strength of the U.S. economic recovery.
* Treasuries climbed on Friday after a surprise drop in May retail sales raised doubts about the vigour of the recovery and revived the safety bid for government bonds.
* “Given recent remarks from Bernanke on the jobless rate, the market feels that the chance of a Fed rate hike in the coming months is very slim,” said Yoshio Takahashi, a fixed-income strategist at Barclays Capital in Tokyo.
“Compared to March, the market has become more sensitive to factors that would push yields lower.”
* Federal Reserve Chairman Ben Bernanke said last week the U.S. economy was on a solid footing but cautioned it could be years before jobs lost during the deep recession of 2008-2009 are restored. His emphasis on the struggles of the U.S. jobs market suggested the central bank was in no rush to raise interest rates. [ID:nN09158380]
* Economists forecast the May Producer Price Index numbers due on Wednesday and the May Consumer Price Index figures on Thursday to show little inflationary pressure. [ECI/US] Subdued price pressures would reinforce market view for a delayed Fed rate increase.
* Other key data to watch this week includes housing starts, industrial production and capacity utilization on Wednesday, as well as jobless claims on Thursday.
* If they reassure investors that the economy is not on the verge of a double-dip recession, that would work to the advantage of the stock market and to the disadvantage of bonds, other analysts said.
* T-note futures fell 11.5/32 to 120-9.5/32 TYv1. Benchmark 10-year notes dropped 6/32 in price to yield 3.266 percent US10YT=RR, up 2 basis points from New York trade on Friday. But the 10-year yield has stood around the middle of a 3.00 to 3.50 percent trading range since late May when fear of Europe’s debt crisis spurred safety demand for Treasuries.
* Two-year notes edged down 1/32 in price to yield 0.767 percent US2YT=RR, up 3 basis points. Thirty-year bonds dipped 7/32 in price to yield 4.170 percent US30YT=RR, up about a basis points.
* St. Louis Fed President James Bullard speaks on “The Global Recovery and Monetary Policy” and participates in a panel discussion hosted by the Institute of Regulation and Risk North Asia from 0915 GMT in Tokyo. (Editing by Joseph Radford)