TREASURIES-Prices edge up as Draghi comments add bond bid

Fri Feb 8, 2013 9:20am EST

Related Topics

* Prices edge up after ECB comments increase rate
speculation
    * Volumes seen light as U.S. East Coast prepares for
snowstorm
    * Treasury to sell $72 bln in new 3, 10 and 30-year bonds

    By Karen Brettell
    NEW YORK, Feb 8 (Reuters) - U.S. Treasuries prices rose
slightly on Friday, consolidating a dramatic rally from Thursday
after comments from European Central Bank President Mario Draghi
raised speculation that the bank would cut interest rates to
stem the region's strengthening currency.
    Draghi said on Thursday that he was monitoring the effect of
the strengthening euro, raising expectations that the ECB may
cut rates from a record low 0.75 percent. 
    The comments boosted the U.S. dollar against the euro, and
lifted safe haven assets including Treasuries and German bunds.
    Benchmark 10-year Treasuries yields fell as low
as 1.93 percent on Thursday before seeing a late day backup to
1.97 percent. The notes have now come back with the yield at
around 1.95 percent on Friday.
    "The market went out very heavy last night and has bounced
back here somewhat," said Charles Comiskey, head of Treasuries
trading at Bank of Nova Scotia in New York.
    Treasuries are now holding near the bottom end of their
recent range after a selloff in late January and early February
pushed the 10-year notes to more than eight month highs of 2.06
percent on February 4.
    Comiskey sees the notes' current yield range as being
between around 1.90 percent and 2.03 percent.
    Trading was expected to be light on Friday as residents on
the U.S. east coast prepared for a large snowstorm in the
region.
    The next focus for the market will be the Treasury's sale of
$72 billion in new debt next week. This will include $32 billion
in three-year notes on Tuesday, $24 billion in 10-year notes on
Wednesday and $16 billion in 30-year bonds on Thursday.
    The Federal Reserve will buy between $1 billion and $1.5
billion in Treasury Inflation-Protected Securities (TIPS) due
between 2020 and 2042 on Friday as part of its ongoing bond
purchase program.
FILED UNDER: