TREASURIES-Prices fall before 30-year debt sale

Thu Jan 10, 2013 9:17am EST

Related Topics

* Prices fall before $13 billion, 30-year bond sale
    * Fed will buy $2.75-$2.5 billion in notes due 2020-2022
    * Risk-taking in Europe, stocks gains dampen Treasuries
demand

    By Karen Brettell
    NEW YORK, Jan 10 (Reuters) - U.S. bond prices fell on
Thursday, after a weak 10-year auction on Wednesday increased
expectations that today's 30-year bond sale would need higher
yields to attract demand.
    The Treasury will sell $13 billion in 30-year bonds in its
final sale of $66 billion in coupon-bearing supply this week.
    Demand for safe-haven U.S. debt ebbed on Thursday after
strong demand for a sale of new Spanish government debt helped
risk taking in Europe and as U.S. stock futures rose.
    "It's a little bit of risk on," said Tom Tucci, head of
Treasuries trading at CIBC in New York. And, "I'm not so sure
that real money managers have appetite for the 30-year sector of
the curve right now."
    Benchmark 10-year notes were last down 10/32 in
price to yield 1.90 percent, up from 1.86 percent late on
Wednesday.
    Thirty-year bonds fell 20/32 in price to yield
3.10 percent, up from 3.06 percent on Wednesday.
    The Treasuries auction comes as investors debate whether
2013 will be the year that finally ends the 30-year bull-run in
U.S. government debt.
    Yields are trading near eight-month highs after minutes
released last week from the Federal Reserve's December meeting
sparked speculation that the U.S. central bank may end its bond
purchase program before year-end, sooner than most expected.
    "When the minutes came out it put doubt in people's minds
about the duration on bond purchases, all of a sudden people
started to think that maybe it's not going to happen through the
balance of this year," said Tucci.
    The resolution of the so-called "fiscal cliff" has also
dampened the safety bid for U.S. debt since the beginning of the
year.
    Investors will now be closely watching a speech that Fed
Chairman Ben Bernanke is due to give on Monday at the University
of Michigan for any futher indications of how long the Fed's
latest bond purchase program will last.
    The Fed will buy between $2.75 billion and $3.50 billion in
notes due from 2020 and 2022 on Thursday as part of this
program, which is designed to reduce borrowing rates and spur
hiring.
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