Asian financial markets continued to mark time yesterday while waiting for cues from the United States. The first key signal of US investor sentiment in the wake of the terror strike in New York on Tuesday was due yesterday when US treasuries were scheduled to begin an abbreviated day's trading. Trading before that signal - and the benchmarking yields set by treasury trades - Asian bond markets, currency markets, and money markets have been left virtually sidelined. Dealers said that contributing to sharply lower volumes were informal agreements to stick to only essential trades, in response to appeals from market regulators and industry associations such as the Paris-based ACI Financial Markets Association. In Hong Kong, overnight call money spiked briefly to as high as 4.5 per cent from a low of 2.75 per cent, and ended the day at 3.37 per cent. Benchmark three-month Hong Kong interbank offered rate was 213 basis points lower at the close, at 3.15 per cent - a retreat attributed by dealers to expectations of an easing in US interest rates. On bond markets, volume remained 'very light', said HSBC's Pierre Goad, although there had been a pick-up in customer inquiries. 'We were providing prices and doing transactions - but we're still not seeing an active two-way market with traders posting prices and being ready to deal,' he said. Exchange rates remained stable in volumes reported to be just 33 per cent of normal daily turnover. The dollar rate was last quoted in Asian trade at 119.03 yen from Wednesday's close of 119.49 in the US. Trade on financial markets continued to be clouded also by uncertainty about the impact the terror strike would have on US consumers. 'This might be the last straw,' said Dong Tao, Asia chief economist for Credit Suisse First Boston. 'It might possibly stop US consumers from spending - and that will mean the recent slump in the US will last longer and go deeper.' The consequences for Hong Kong and the region would be 'bad', he said. 'Not only will we see not much improvement in the remainder of this year, we'll probably see not much material improvement for the first two quarters of next year,' he said. David Marshall, of ratings agency Fitch, said the long-term effects of this week's events remained uncertain. 'But the point that has been widely made is that the US economy was poised on the brink of a significant downturn and this could be the thing that tips it over the edge,' Mr Marshall said. Fitch had not yet put any institutions on ratings watch as a result of the events, he said. 'We will just keep a close eye on financial institutions because of expectations that economic growth could be even weaker,' he said. Economist Intelligence Unit chief China economist Ken Davies said the agency had already planned to downgrade Hong Kong's economic growth forecast for the year from 0.7 per cent to 0.5 per cent. Now, it expected to downgrade US growth forecasts for the year to less than 1 per cent from 1.6 per cent, he said. Macquarie Services Hong Kong regional economist Li Lian Ong said that consumers would now 'batten down the hatches' but it was too soon to call a US recession or to downgrade economic forecasts for Hong Kong.