Bonds Barely Move in Asia After Fall on Spain, China

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U.S. Treasuries were largely unchanged in Asia on Tuesday after slipping the previous day on reduced demand for safe haven debt after Spain sought help for its banks and data from China showed an improvement in the pace of manufacturing.

Still, the market was underpinned by unexpectedly weak U.S. manufacturing data. The factory activity index of the Institute for Supply Management (ISM) fell to 49.5 in November - the softest since July 2009 - from 51.7 the month before.

The yield on the 10-year U.S. Treasuries stood at 1.628 percent, almost unchanged from late U.S. levels.

On Monday, the yield ticked up as Chinese manufacturing returned to growth in November for the first time in over a year and Spain formally requested the disbursement of 39.5 billion euros ($51.4 billion) of European funds to recapitalise its banking sector.

How President Barack Obama and Republicans in the Congress will deal with the looming "fiscal cliff" remains the biggest focus of the market, even though the market seemed to have given up responding to every twist and turn in efforts to resolve the crisis.

Republicans proposed steep spending cuts on Monday but gave no ground on President Barack Obama's call to raise taxes on the wealthiest in their first formal proposal.

"Now that the both sides have put out their plans on the table, we can say at least the negotiation is starting. But the way it looks, it will be difficult to get any deal by the second week of December. Probably it's going to take until the third week," said Tomoaki Shishido, fixed income analyst at Nomura Securities.