TREASURIES-Prices rise modestly on worries over fiscal crisis
* U.S. and Greece budget concerns underpin bids for bonds * Traders shrug off U.S. durables, consumer data * U.S. sells $35 billion in new two-year notes By Richard Leong NEW YORK, Nov 27 (Reuters) - U.S. Treasuries debt prices rose modestly on Tuesday as persistent worries over the lack of progress in negotiations in Washington to avert a fiscal crisis drove safe-haven bidding for U.S. government debt. Gains were limited, however, in choppy trade, with investors reluctant to push significantly lower while the government sells $99 billion of new debt this week. The absence of a budget compromise between President Barack Obama and federal lawmakers would cause a series of automatic tax hikes and spending cuts in early 2013 that may reduce the budget deficit, but also tip the world's biggest economy into recession. "The market is pricing in a slow growth environment, even negative growth," said Anthony Valeri, fixed income strategist with LPL Financial in San Diego. On below-average trading volume, benchmark 10-year Treasury notes were up 4/32 in price at 99-24/32, yielding 1.654 percent, down from 1.666 percent late Monday. The 10-year yield has been stuck in the middle of its recent trading range. The 30-year bond last traded 4/32 higher at 99-2/32 to yield 2.797 percent, down 0.6 basis point on the day. Uneasiness about Greece and the United States overshadowed somewhat better-than-expected data on the U.S. economy. Some economists played down their significance since some indicators were measured before superstorm Sandy pummeled the Northeastern United States a month ago, disrupting business. Longer-dated bond prices tested their session highs earlier on a brief weakness in Wall Street stocks and the Federal Reserve's latest purchase of debt for its "Operation Twist" stimulus program. The bond market retraced overnight losses linked to news that international lenders agreed to a debt relief deal for Greece so it will obtain more financial aid to avoid a messy default, analysts said. They said the selloff in bonds faded when traders grew skeptical over the lack of details on how Greece will carry out budget reforms needed to meet its new debt targets. "Their debt levels are still way too high," said Bret Barker, portfolio manager at TCW Group in Los Angeles. The market also had several indicators on the health of the U.S. economy to digest. Durable orders came in unchanged in October, less weak than a 0.6 percent fall predicted by economists. Home prices in 20 major U.S. cities grew 0.4 percent in September, reinforcing the view of an improving real estate sector, the Standard & Poor's/Case-Shiller report showed. Americans' optimism on the economy rose to its highest level in more than four years in November, according to the Conference Board. Without a shift in perception about the economy, most of the day's trading was short-term plays driven by this week's Fed purchases of longer-dated debt and the government's auctions of $99 billion in short-to-medium term supply, analysts said. The Treasury sold $35 billion of two-year notes on Tuesday with solid bidding producing a high yield of 0.27 percent. The Treasury Department will sell $35 billion in five-year notes on Wednesday and $29 billion in seven-year debt on Thursday. Meanwhile, the Fed bought $1.9 billion in Treasuries due in February 2023 through May 2030. The U.S. central bank could buy up to $15 billion in federal debt the rest of the week in four more operations.
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