TREASURIES-U.S. bonds firm on strong debt auction, euro data

Fri Feb 15, 2013 5:24am EST

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LONDON, Feb 15 (Reuters) - U.S. Treasuries firmed in Europe
on Friday after strong demand at a 30-year bond auction and
renewed concerns about the weakness of the euro zone economy
increased demand for low-risk assets.
    The U.S. government sold $16 billion of 30-year bonds at a
high yield of 3.180 percent on Thursday, drawing solid demand
and sparking a rally in U.S. paper. The auction wraps up a busy
week in terms of supply, with debt sales totalling $72 billion.
 
    Ultra-long bonds outperformed the rest of the curve on
Friday, with the 30-year yield dropping 2.7 basis
points to 3.1509 percent, while the benchmark 10-year T-note
yield dipped 1.4 bps to 1.9844 percent.
    T-note yields hit 10-month highs of 2.062 percent earlier
this week.
    "Supply was a concern this week, but now that it is behind
us, bonds look in pretty okay shape," said Craig Collins, a
trader at Bank of Montreal.
    He expected yields to continue falling near-term towards
1.9250, around February's lows.
    Traders said data showing the euro zone economy sliding
further than expected into recession was also giving Treasuries
a lift. 
    Worries about the region's economy may increase if the euro
currency continues to appreciate, hurting exporters'
competitiveness.
    Talk of "currency wars" will feature high on the agenda of a
Group of 20 meeting in Moscow. Hosts Russia say the G20 will
back the thrust of a G7 text, which reaffirmed a commitment to
floating exchange rates.
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