REFILE-TREASURIES-U.S. bonds supported by Fed purchases, data eyed

Tue Jan 15, 2013 6:11am EST

LONDON Jan 15 (Reuters) - U.S. Treasury prices rose on Tuesday supported by the Federal Reserve's purchase of long-dated bonds, with investors looking at a bout of data due later for insight into the country's economic health.

* On Monday, the Fed bought $1.47 billion in Treasuries with maturities ranging from February 2036 to November 2042, part of its $45 billion monthly purchases of government securities aimed to lower unemployment.

* The bond-purchases were supportive, with 10-year yields falling 1.8 basis points to 1.83 percent and 30-year yields easing 2.1 bps to 3.02 percent.

* "We are back to fundamentals later today with retail sales and PPI (producer price data)... But it seems that the Fed coming in and buying paper, without any supply, has been enough (for the market) to break through some resistance points," Craig Collins, a trader at Bank of Montreal said.

* Investors would look at retail sales, manufacturing and inflation numbers later in the day to gauge the health of the world's largest economy.

* Having broken through resistance at 1.86 percent, the market was now trading around the next resistance level of 1.825 percent, Collins said.

* "So the buying this morning has gotten us up to the next resistance point and if we breach this, then we target 1.75 percent," he added.

* The rise in bond prices also came as Federal Reserve Chairman Ben Bernanke on Monday warned the economy was still at risk from political gridlock over the deficit and gave no clear hints on when the Fed would curb its aggressive bond purchases.

* Fed minutes this month showing officials concerned about the potential risks of ultra-easy monetary policy triggered market speculation that it could be unwound this year, prompting a sell-off in U.S. Treasuries.

* "I don't think there is anything new on Bernanke, I think people just overreacted to the minutes," a second trader said.

FILED UNDER: