TREASURIES-Prices gain as higher yields lure buyers
* Prices gain as yield backup lures some buyers * Higher jobless claims temporarily boost prices * Intermediate debt volatile on Fed speculation By Karen Brettell NEW YORK, Oct 18 (Reuters) - U.S. Treasuries prices gained o n T hursday after a three-day rise in yields brought in some buyers and after data showed that the number of Americans filing new claims for unemployment benefits rose last week. Yields have jumped this week on stronger economic data and as investors take greater hope that Spain will get credit support from Europe's bailout fund, boosting risk-taking and reducing demand for safe-haven debt. "We're retracing a little bit of the drastic move we've seen," said Rick Klingman, a Treasuries trader at BNP Paribas in New York."We are seeing a little bit of better real money buying at these levels, and we've hit yield targets that some people had." Benchmark 10-year notes rose 8/32 in price to yield 1.80 percent, near the 200-day moving average and down from 1.82 percent late on We dnesday. The yield has risen from 1.66 percent on Friday. Thirty-year bonds rose 22/32 in price to yield 2.97 percent, after closing at 3.00 percent on Wednesday. There was heavy selling of Treasuries on Wednesday as investors adjusted for the improving economic data and the apparently more stable European situation, which has boosted riskier assets like stocks and hurt bonds. This shift is likely to keep yields more elevated than in previous weeks, said Sean Murphy, a Treasuries trader at Societe Generale in New York. "The 'risk on' trade is strengthening," he said. Prices temporarily extended gains after Thursday's report showing U.S. jobless claims rose in the latest week, though the data still pointed to a slowly healing labor market. "It was a little bit higher than expected," said Murphy. Speculation that the Federal Reserve may modify language in its guidance over how long it will hold rates down also caused some volatility in intermediate-dated debt, traders said. The U.S. central bank has said it will hold rates near zero until 2015. But some investors are speculating that due to the improving data, the timeline could be shortened when the Fed meets next week.
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