TREASURIES-Bond prices fall as stocks regain bid

Mon Nov 19, 2012 8:50am EST

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* Bond prices fall as stocks regain bid
    * Hopes on fiscal cliff increase risk taking, reduce bond
demand
    * Volumes light ahead of Thanksgiving holiday

    By Karen Brettell
    NEW YORK, Nov 19 (Reuters) - U.S. bond prices fell on Monday
as signs of progress in talks to resolve a fiscal crunch caused
by large, automatic budget cuts and tax hikes boosted demand for
riskier assets, including stocks, and made safe haven bonds
relatively less attractive.
    In the past two weeks Treasuries yields have fallen to
two-month lows as investors flee stocks on concerns that U.S.
lawmakers will fail to reach a deal to resolve the $600 billion
"fiscal cliff," which would significantly dampen economic
growth.
    Stocks investors appeared more confident on Monday, however,
after leading Republican and Democrat lawmakers expressed
confidence on Sunday that they could reach a deal, even as they
stuck to their positions. 
    "There have been signs of life. I think the big possibility
to watch for is how much of a recovery we can create in
equities, and then how long that holds," said Jim Vogel,
interest rate strategist at FTN Financial in Memphis, Tennessee.
    Bonds are largely taking their cues from other markets as
investors wait on new information relating to the any economic
effect of recent storm Sandy, the resolution of the fiscal cliff
and before the Federal Reserve's next policy meeting in
December.
    "There's no fundamental bond story at the moment that can be
aggressively traded, which leaves us to react to other markets,"
Vogel said.
    Trading volumes are also expected to be light this week with
no important economic releases due and before the U.S.
Thanksgiving holiday on Thursday.
    Benchmark 10-year Treasuries were last down 9/32
in price to yield 1.61 percent, up from 1.58 percent on Friday.
The yields have fallen from 1.75 percent on Nov. 6.
    Thirty-year bonds fell 21/32 in price to yield
2.76 percent, up from 2.73 percent late on Friday.
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