TREASURIES-Prices hold steady ahead of U.S. debt supply
* Prices firm, yields hold in recent range * Treasury to sell $72 billion in three-, 10-, 30-year bonds * Fed buys $1.45 bln in bonds due 2036-2042 * Focus on sequester ahead of Tuesday's State of the Union By Karen Brettell NEW YORK, Feb 11 (Reuters) - U.S. Treasuries held steady on Monday before new Treasury supply this week, and as investors focused on President Barack Obama's State of the Union address on Tuesday. The Treasury will sell $72 billion in new debt, including $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. New Treasury supply this week may begin to weigh on prices, though large buybacks by the Federal Reserve are expected to cap weakness. "The market needs to digest the supply that is coming this week," said Sean Simko, portfolio manager at SEI Investments in Oaks, Pennsylvania. The supply is seen as unlikely, however, to knock the market out of the range that it's been trading in for the past few weeks. "The big picture hasn't changed, there are still the ongoing issues of slow growth and uncertainty," said Simko. "Until we really start seeing headlines that are changing the bigger picture we're going to stay in this range." Benchmark 10-year Treasuries were steady in price on Monday to yield 1.96 percent. The notes are seen trading in a range from around 1.90 percent to 2.04 percent. The Fed bought $1.45 billion in long dated debt due from 2036 to 2042 on Monday and plans further long-dated purchases this week as well as buybacks in the 10-year sector and five-year sector. Attention is also expected to focus on President Barack Obama's State of the Union address on Tuesday, which will be watched for any signs that lawmakers are likely to reach a deal to avert automatic spending cuts. The White House said on Friday that government spending cuts due to take effect on March 1 would have harsh consequences for ordinary Americans and the U.S. economy. "We're several weeks away from the soft date of the sequester so people will be looking to see if any progress is made," said Jason Rogan, managing director in Treasuries trading at Guggenheim Partners in New York. "As we get closer to March, I think it will help to move the market one way or another with the rhetoric coming out of Washington," he added. Federal Reserve Vice Chairman Janet Yellen is also due to speak on Monday about the economic recovery at 1 p.m. (1800 GMT) Trading volumes were lessened overnight on Monday as China and Japan both closed markets for national holidays.
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