TREASURIES-Prices ease on jobless claims, bond sale
* Treasury to auction $13 billion of 30-year bonds * U.S. weekly jobless claims lower than expected * Investors mull impact of Fed unemployment target By Chris Reese NEW YORK, Dec 13 (Reuters) - U.S. Treasury debt yields rose for a third consecutive day on Thursday as investors pushed prices down, heading into an auction of $13 billion of 30-year bonds in the afternoon and ahead of further debt sales next week. Prices were also undermined by data showing claims for unemployment benefits were lower than expected in the latest week, which diminished some of the safe-haven luster of lower-risk U.S. government debt. Losses were limited, however, as investors mulled the long-term impact of the Federal Reserve's announcement on Wednesday to link monetary policy to specific targets for unemployment and inflation. "The general thought is we have an auction today, but after that you have to look at risk as a whole," said Matt Duch, portfolio manager at Calvert Investments in Bethesda, Maryland. The benchmark 10-year Treasury note was trading with a yield of 1.72 percent, marking the highest yield in more than a month and up from a high yield of 1.65 percent in an auction of $21 billion of the notes on Wednesday. Data on Thursday showed seasonally adjusted initial state jobless benefit claims dipped to 343,000 in the week ended Dec. 8, down from a revised 372,000 the previous week and below expectations for a reading of 370,000. Separately, data showed retail sales rose in November while producer prices fell. "The main surprise is the fall in initial claims, which suggests the labor market might be improving a bit quicker than expected, and that would mean the unemployment rate might reach the Fed's new target a bit quicker than some people think," said David Sloan, an economist at 4Cast Ltd in New York. The Fed announced a new round of monetary stimulus on Wednesday and took the unprecedented step of saying interest rates would remain near zero until the U.S. unemployment rate falls to at least 6.5 percent. Analysts said market reaction was contained as investors mulled what to make of the announcement. But many predicted tying monetary policy more explicitly to economic data would make markets vulnerable to price swings. The U.S. central bank previously said it expected to hold rates near zero through at least mid-2015. Analysts said any U.S. Treasury sell-off was limited by concerns over whether U.S. lawmakers will agree on a deal to avoid a $600 billion mix of spending reductions and expiring tax cuts set to begin in 2013. Such worries were underscored by Fed Chairman Ben Bernanke on Wednesday, who warned that running over this "fiscal cliff" would lead to a new recession. He told reporters the Fed could ramp up its bond buying "a bit" but emphasized that monetary policy has limits and could not fully offset the impact. While pondering the Fed's latest steps and the potential U.S. fiscal crisis, investors were keen to reduce prices going into the 30-year bond auction on Thursday afternoon. The Treasury sold $32 billion of three-year notes on Tuesday and $21 billion of 10-year notes on Wednesday. Next week it will sell two-year, five-year and seven-year notes as well as five-year Treasury inflation-protected securities.
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