Treasuries at 3% May Still Lack Appeal Unless Dollar Rallies
- Correlation of U.S. yields with dollar broke down in December
- Investors want to see dollar stabilize before buying: Sumitomo
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Treasury 10-year yields at 3 percent may fail to entice Japanese investors unless the dollar becomes more resilient, according to Sumitomo Mitsui Trust Asset Management Co.
“Japanese investors were buying Treasuries when a rise in yields was pushing up the dollar, but that correlation started to break down in December," said Hideaki Kuriki, Tokyo-based chief fund manager at the company that oversees the equivalent of $89 billion. Their appetite for U.S. bonds has now been limited, and local investors have been unwinding their positions as the dollar-yen’s outlook starts to deteriorate, he said.