TREASURIES-Prices choppy as U.S. data mixed; jobs data awaited

Thu Jan 31, 2013 10:12am EST

Related Topics

* Chicago PMI index at highest in January since April
    * U.S. jobless claims bounce off 5-year low
    * Nonfarm payrolls data awaited on Friday

    By Luciana Lopez
    NEW YORK, Jan 31 (Reuters) - Prices for U.S. Treasuries
seesawed on Thursday after the Fed said it would continue buying
bonds as the economy temporarily stalled, but uncertainty about
growth in the world's biggest economy kept yields within recent
ranges.
    Investors were also looking ahead to key nonfarm payrolls
data on Friday, which could shed more light on whether jobs are
growing fast enough to satisfy policymakers.
    Data on Thursday painted a mixed picture of the U.S.
economy, with jobless claims bouncing off five-year lows to
levels consistent with modest job growth. 
    However, the pace of business activity in the U.S. Midwest
picked up in January from a more than three-year low the month
before as new orders jumped. 
    Yields for 10-year Treasuries continued testing the 2
percent level, as they have since Monday, but found traction
difficult to get.    
    While the easing of global stresses, including the euro zone
sovereign debt crisis, means that "people aren't really
desperate to own Treasuries," there are still plenty of question
marks keeping investors cautious, said Kim Rupert, managing
director of global fixed income analysis at Action Economics LLC
in San Francisco.
    From the possibility of automatic spending cuts kicking in
at the start of March to lingering worries that the Fed will at
some point cut off its easing spigot, investors are reluctant to
push Treasuries outside recent ranges, she said.
    "We're still just trying to get a clean reading, but it
doesn't look like growth is going to pick up substantially
anytime soon," she said.
    Ten-year Treasuries are likely to see yields within the
range of around 1.70 percent to 2.10 percent in coming sessions,
said William O'Donnell, head of U.S. Treasury strategy at RBS
Securities in Stamford, Connecticut. 
    Recent higher yields have lured some investors back into
buying, he said. "I think people like the levels."
    Thursday's data came after the U.S. Federal Reserve ended a
two-day meeting on Wednesday by leaving in place its $85 billion
per month asset buying program as the economy was paused.
 
    Ten-year notes traded 1/32 lower to yield 1.994
percent, from 1.992 percent late on Wednesday.
    Thirty-year bonds traded 4/32 lower to yield
3.187 percent from 3.1822 percent late on Wednesday. 
    After a week packed with economic data - including
disappointing fourth-quarter GDP figures - and the Fed meeting,
investors are now turning to the last major milestone of the
week: nonfarm payrolls on Friday.
    The Fed wants the unemployment rate to drop closer to 6.5
percent, but analysts in a Reuters polls see the unemployment
rate staying at the current 7.8 percent.
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