TREASURIES-Bonds prices little changed, ECB weighed

Thu Feb 7, 2013 9:52am EST

Related Topics

* ECB'S Draghi seen less hawkish than expected
    * U.S. jobless claims higher than expected, but labor market
healing
    * Spanish debt sees strong demand as yields below crisis
level

    By Luciana Lopez
    NEW YORK, Feb 7 (Reuters) - Prices for U.S. Treasuries
traded near flat on Thursday as investors weighed
less-optimistic-than-expected comments from the head of the
European Central Bank against strong demand for Spanish debt.
    While U.S. data pointed to healing in the labor market, with
a drop in the number of Americans filing new claims for jobless
benefits last week, the data was secondary to developments
abroad, analysts said. 
    Given that European economic data had a relatively good run 
recently, people "were expecting a little more hawkishness than
they received from the head of the ECB," said Ian Lyngen, senior
government bond strategist at CRT Capital LLC in Stamford,
Connecticut.
    "U.S. economic data took a backseat this morning as the
world focused on global monetary policy," Lyngen said.
     
    ECB President Mario Draghi said at a news conference that 
"the economic weakness in the euro area is expected to prevail
in the early part of 2013."  
    However, Spain sold more debt than planned and demand was
similar to that seen at strong auctions in January, indicating
investors. Despite lower prices for the bonds, yields were still
only a fraction of their levels at the height of worries about
Spain's economy.    
    The 10-year Treasury note last traded flat to
yield 1.964 percent.
    The 30-year bond last traded down 1/32 in price
to yield 3.174 percent, from 3.1703 percent late on Wednesday.
    U.S. bond prices have stabilized this week after a sharp 
sell-off. However, options traders in U.S. Treasuries futures
and in exchange-traded funds that track the moves in long-dated
Treasuries have been betting on lower bond prices and higher
yields. 
    Initial claims for state unemployment benefits dropped by
5,000 to a seasonally adjusted 366,000, the Labor Department
said. That was higher than anticipated.
    A separate report showed U.S. nonfarm productivity fell in
the fourth quarter by the most in nearly two years as output
increased only marginally despite steady gains in employment.
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