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Benchmark US Treasury yields have touched their lowest since late February at 2.32 per cent on Tuesday as investors looked ahead to key US events later this week.

On Wednesday the Federal Reserve will release the minutes of its last meeting – whose dovish tone wrong-footed the market – and on Friday, all-important US employment data are due.

Bonds rallied ahead of the releases, and on Monday in New York, yields on the 10-year note fell fell 7bp to a low in early Sydney trading of 2.322 per cent. Before the Fed’s meeting in the middle of last month, they’d reached 2.62 per cent.

By late-morning trade in Asia, the yield on the 10-year stood at 2.328 per cent.

Analysts at Nomura admitted to being a little surprised by the move, which was triggered by the overnight gains of US Treasuries

“We see few reasons for the fall in Treasury rates, either in terms of supply and demand
or fundamentals”, said Naka Matsuzawa in a note to clients.

He added that the move needed close watching if the bullish tone persisted: “that could mark the beginning of a new market cycle, in our opinion.”

Asian government bonds followed suit with Australia’s 10-year benchmark yield four-month lows of 2.6 per cent. The Reserve Bank of Australia meets today but is not expected to move rates from their current 1.5 per cent level as it struggles between a desire to weaken its currency and the need to rein in an ever-more heated housing market.

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