TREASURIES-Prices ease as investors book profits
* Yields expected to hold near recent lows * Market worries about U.S. fiscal crisis, Greek debt * 10-year note price resistance seen at yield of 1.54 pct By Chris Reese NEW YORK, Nov 14 (Reuters) - U.S. Treasury debt prices eased on Wednesday as investors booked profits from a post-election rally that was driven by safe-haven buying over concerns about a looming U.S. fiscal crisis and Europe's debt woes. U.S. Treasuries briefly pared price losses earlier after data showing an unexpected drop in producer prices and a larger-than-expected dip in retail sales in October. Price losses were also pared later in the morning as stocks fell. "We seem to open up a little weaker in Treasuries only to find equities lose ground and Treasuries start to grind tighter or at least hold minimal losses," said Wilmer Stith, co-portfolio manager of the Wilmington Broad Market Bond Fund in Baltimore. Ten-year Treasury notes were trading 5/32 lower in price to yield 1.61 percent, up from 1.59 percent late on Tuesday. The yield on Tuesday touched 1.57 percent, which was the lowest in 10 weeks. "It seems the 10-year wants to test a (technical) resistance level at 1.54 percent," Stith said. Yields were not expected to stray far from their lowest levels since September with price support from concerns over the so-called fiscal cliff of $600 billion in U.S spending cuts and tax increases set to start in January that could send the economy back into recession. So far, Democrats and Republicans have each stood their ground since last week's presidential and congressional elections with disagreements over taxes preventing a compromise on deficit reduction. Some analysts expect a deal will be reached before the end of the year. "I am of the opinion the administration and Congress will prevent a fiscal-cliff disaster form occurring, that the negative impact to GDP at the end of the day is going to be in the much smaller arena of 0.5 percent as opposed to the much larger number that some people are bracing for, and if that happens that would provide a reason for higher Treasury yields," Stith said. Others said Treasuries are already pricing in an expectation the budget crisis will be avoided. "The market for the most part is factoring in that it won't happen; that there will be some resolution; something that pushes out further the time line or some sort of compromise -- there is a very small percentage priced in that it will actually happen," said Kenneth Naehu, head of fixed income at Bel Air Investment Advisors in Los Angeles. Concerns in Europe as the International Monetary Fund and the European Union failed to agree on long-term budget goals for Greece also kept markets edgy, despite the growing likelihood the country would receive the aid payments due this year . Separately, data on Wednesday showed U.S. retail sales fell in October for the first time in three months. Superstorm Sandy, which hit the northeastern United States on Oct. 29, slammed the brakes on automobile purchases, suggesting a loss of momentum in spending early in the fourth quarter. U.S. producer prices also unexpectedly fell last month as the cost of energy and motor vehicles tumbled, according to a government report on Wednesday that showed little inflation pressures in the economy. Investors are looking ahead to minutes from the Federal Reserve's October policy meeting, to be released on Wednesday afternoon, for any clues as to whether the central bank intends to buy more Treasuries once its "Operation Twist" stimulus program expires at the end of December. In the meantime, 30-year Treasury bonds were trading 17/32 lower in price to yield 2.75 percent, up from 2.73 percent late Tuesday.