TREASURIES-Prices slip in profit-taking from recent rally
* Benchmark yields bounce off 10-week low touched on Tuesday * Superstorm Sandy pushes weekly jobless claims to 1-1/2-year high * No compromise seen soon in government's 'fiscal cliff' debate By Chris Reese NEW YORK, Nov 15 (Reuters) - U.S. Treasury debt prices eased on Thursday as some investors took profits from a sharp rally over the past week, although fears of a fiscal crisis were likely to keep underlying demand firm. Treasuries pared early price losses after data showing much-higher-than-expected claims for jobless benefits in the latest week after Superstorm Sandy left tens of thousands of people out of work. Losses were again pared after the Philadelphia Federal Reserve Bank said its business activity index unexpectedly fell in November, with Sandy again being a factor. The jobless claims report "does suggest quite a weak payrolls reading for November, but the weakness should be a temporary thing," said David Sloan, economist at 4Cast Ltd in New York, adding, "It does suggest the hurricane is going to have a bigger short-term impact than expected." Treasuries have been rallying since last week following the U.S. presidential election, as worries over the outcome of a looming U.S. budget crisis have bolstered the safe-haven demand for U.S. government debt. If the White House and a divided Congress do not produce a deal on the federal budget before year-end, the series of automatic tax hikes and spending cuts known as the fiscal cliff will come into effect early in 2013, hitting economic growth. President Barack Obama said on Wednesday that Republicans would have to agree to raise taxes on the wealthy as the first step in a budget deal. But top Republican lawmakers have been steadfast in pushing to hold down tax rates for the wealthiest Americans. Few market players expect a compromise between the Democrats and the Republicans any time soon, suggesting firm support for Treasuries in coming weeks. A significant rise in Treasury yields was also limited after San Francisco Fed President John Williams said late on Wednesday the Federal Reserve would likely keep buying both mortgage-backed securities and Treasuries until late 2013. Minutes of the Federal Reserve policy meeting in October, in which a number of officials reckoned the central bank would need to ramp up its bond buying to help the economy, also gave Treasuries support. The minutes showed a number of Fed officials thought the central bank would need to buy more bonds when its "Operation Twist" program expires at the end of the year. Still, investors moved to capitalize on the recent price gains, and benchmark 10-year Treasury notes traded 2/32 lower in price to yield 1.60 percent, up from 1.59 percent late Wednesday. Benchmark yields touched a 10-week low on Tuesday of 1.57 percent. Superstorm Sandy drove new claims for U.S. jobless benefits to a 1-1/2-year high last week at a seasonally adjusted 439,000, the Labor Department said. That was the highest since April 2011 and well above the median forecast in a Reuters poll. It was also the biggest one-week increase in new claims since 2005. Meanwhile, the Philadelphia Fed said its business activity index slumped to -10.7 in November from 5.7 the month before. The fall was much steeper than economists' expectations for a slip to 2.0, according to a Reuters poll.