TREASURIES-Yields near 10-month high before new note supply
* Yields rise before $24 bln 10-yr note sale * 10-year notes test technical support levels * Treasuries temporarily pare price losses on retail sales data By Karen Brettell NEW YORK, Feb 13 (Reuters) - U.S. Treasuries yields rose to approach a 10-month high on Wednesday, with benchmark notes testing technical support levels that, if broken, could spark a larger selloff, as banks and investors prepared to absorb new supply of 10-year notes. The Treasury will sell $24 billion in 10-year notes Wednesday, the second of $72 billion in new coupon supply this week. It will also sell $16 billion in 30-year bonds Thursday. Preparation for the auction helped send 10-year note yields as high as to 2.03 percent on Wednesday, at the high end of their recent trading range of around 1.90 percent to 2.03 to 2.06 percent. "We are at pretty critical juncture, I think it's going to be important for the market to hold these levels on a short-term basis," said Greg Faranello, a Treasuries trader at Societe Generale in New York. If the 10-year notes yields hold a break above the 2.03 percent to 2.06 percent level, then technical analysis suggests that the debt's yields may next increase to the 2.20 percent area. Traders expect the new debt to price at around 2.05 percent , according to trading in the "when-issued" market. The debt pared some price losses, however, after data showed little growth in consumer spending in January. U.S. retail sales barely rose in the month as tax increases and higher gasoline prices restrained spending. nCATDDE9E4] Benchmark 10-year notes were last down 13/32 in price to yield 2.03 percent, up from 1.98 percent late on Tuesday. Investors are focused on a package of automatic spending cuts due to kick in on March 1, unless lawmakers agree on alternative budget measures or delay negotiations to a later date. The White House has said that cuts will harm economic growth, though many lawmakers say reduced spending is necessary to stabilize the country's rising debt load. Some analysts expect Treasury yields to fall in the weeks heading into the debate deadline as investors adjust for the likely impact of the spending cuts on the economy. The Federal Reserve will buy between $1.25 billion and $1.75 billion of debt due from 2036 to 2042 on Wednesday as part of its ongoing bond purchase program.
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