TREASURIES-Bond prices gain on consumer, fiscal worries
* Data hints U.S. holiday shopping season weakest in 4 years * Hopes fading on a timely deal on U.S. government budget * Trading desks lightly staffed, volume tepid after Christmas By Richard Leong NEW YORK, Dec 26 (Reuters) - U.S. Treasury debt prices rose on Wednesday in light post-Christmas volume as disappointing holiday sales and the lack of progress toward a budget deal in Washington stoked safety bids for bonds. Sluggish consumer spending combined with the risk of a shrinkage in government spending stemming from the 'fiscal cliff' - a package of automatic federal tax hikes and spending cuts worth $600 billion - set to go into effect next year will likely hinder U.S. economic growth in 2013. Such a scenario is friendly for holding Treasuries even with their measly yields. Early data suggested U.S. Christmas shopping grew less than 1 percent from a year ago, which could be the worst year-end retail season since 2008. Economists blamed the disappointing sales on anxiety among Americans about their jobs and taxes next year if politicians fail to reach a timely budget compromise. President Barack Obama is due back in Washington early Thursday for a final effort to negotiate a deal with Congress to avert or at least postpone the fiscal cliff, but traders have turned glum that even a temporary fix will be attained by the Monday deadline. "The market seemed resigned that they might not get a grand bargain done before the end of the year. The best it can hope for is a 'kick the can down road' kind of deal so they could pick it up again early next year," said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co. in New York. Year-end portfolio adjustments also fed some buying of Treasuries, which have earned a mediocre return this year, Milstein said. Benchmark 10-year notes were 8/32 higher in price to yield 1.748 percent, down 2.8 basis points from late on Monday. The 30-year Treasury bond was 13/32 higher with a yield of 2.922 percent, down 2.2 basis points from Monday. The U.S. bond market was closed on Tuesday for Christmas. Most major markets in Europe remained closed on Wednesday. Trading desks at Wall Street firms and investment houses were lightly staffed and will likely remain that way until after New Year's Day. Treasuries trading volume was running 70 percent below its recent average, according to bond broker ICAP.
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