TREASURIES-Prices rise marginally on worries over pace of growth

Wed Jan 23, 2013 10:08am EST

* Benchmark yields remain in 1.8 to 1.9 percent range
    * Fed scheduled to buy longer-dated U.S. government debt
    * U.S. expected to raise debt ceiling but uncertainties
remain

    By Chris Reese
    NEW YORK, Jan 23 (Reuters) - U.S. Treasury debt prices rose
marginally on Wednesday with support from safe-haven buying on
worries over the pace of global growth and uncertainty as the
United States is on track for divisive negotiations on spending
cuts and the budget deficit.
    Treasuries were also lent support as the Federal Reserve is
scheduled to buy $1.25 billion to $1.75 billion of longer-dated
U.S. government debt as part of the central bank's latest
economic stimulus program.
    Investors did some cautious buying in Treasuries on
Wednesday after the S&P 500 and the Dow Jones industrial average
reached five-year closing highs on Tuesday, with gains in
equities stoked by a strong start to the corporate earnings
season.
    Benchmark 10-year notes were trading 5/32 higher
in price to yield 1.83 percent, down slightly from 1.84 percent
late Tuesday. Yields have been relatively rangebound, holding
between 1.80 percent and 1.90 percent for over a week.
    "Japan, Europe and the U.S. are struggling to find something
more than 'surface growth,' and that is leading investors to
hedge their hopes by taking some risk off the table in the form
of U.S. Treasuries," said Kevin Giddis, managing director of
fixed income at Morgan Keegan in Memphis, Tennessee.
    A proposed U.S. debt-limit extension is expected to be
approved later on Wednesday, although the prospect of nearly
four more months of uncertainty balanced out short-term relief
at the measure.
    The extension of the debt limit to May 19 would prevent the
United States defaulting on its debts in the short term, but was
seen as prolonging the sense of uncertainty in markets.
    That uncertainty could filter through into economic data
over coming months, supporting U.S. debt prices near current
levels, as businesses put off investment decisions and consumers
feel the hangover from the expiration of tax breaks.
    One big buyer of Treasuries was certain on Wednesday, with
the Fed scheduled to buy Treasuries maturing February 2036
through November 2042.
    Ahead of that purchase, 30-year Treasury bonds 
were trading 6/32 higher in price with their yield little
changed from late Tuesday at 3.02 percent.
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.