U.S. Treasury futures pushed higher in Asia on Monday, with stocks taking a hit after dismal U.S. data showing more than half a million jobs being slashed for a second straight month underscored the recession's severity.
* While the payrolls report was close to expectations, the figures reaffirmed some economists' forecasts for an annualised contraction of 5-6 percent in the fourth quarter and offered little hope of a near-term let-up in the heavy layoffs.
* Asia stock indexes fell in line with the drop on Wall Street late last week. South Korea's KOSPI and Hong Kong's Hang Seng both shed about 2 percent.
* Activity was limited, with Japanese financial markets closed for a holiday.
* March T-note futures edged up 6/32 to 125-23.5/32 on trade of a little more than 3,000 lots. S&P 500 futures were down 0.6 percent, pointing to a weaker open.
* Cash Treasuries slipped. Two-year notes dipped 1/32 in price to yield 0.779 percent, up 2 basis points from late U.S. trade. Ten-year notes lost 2/32 to yield 2.405 percent, up about a basis point.
* In swaps, spreads were little changed. The two-year spread was quoted at 54.75 basis points and the 10-year spread at 14.5 basis points.
* Swap spreads have shrunk sharply as mortgage portfolios hedge against an expected wave of refinancings as the Fed's purchases of mortgage paper have dragged down rates.
Hefty Treasury debt issuance has also driven up yields relative to swaps, compressing spreads.
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