TREASURIES-Prices climb on Europe growth worries and U.S. jobless

Thu Feb 21, 2013 9:36am EST

Related Topics

* Surveys show downturn in euro zone businesses
    * U.S. weekly jobless claims rise by more than expected
    * Treasuries underpinned by concern over government spending
cuts


    By Chris Reese
    NEW YORK, Feb 21 (Reuters) - U.S. Treasuries rose on
Thursday as worries over a lack of economic recovery in Europe
and higher-than-expected U.S. claims for jobless benefits
prompted investors to buy assets perceived as safe havens.
    Treasuries were bolstered early in the day as prospects the
debt-laden euro zone might soon emerge from recession were
shaken, with surveys showing business indicators unexpectedly
worsened this month, especially in France. 
    Price gains were extended after data showing the number of
Americans filing new claims for unemployment benefits rose by
more than expected last week. 
    "The job market is gradually improving but not fast enough
for the Fed to remove accommodation. We still think a Fed rate
hike is a late 2014 to early 2015 event. They might taper off
bond purchases in the fourth quarter," said Jacob Oubina, senior
economist at RBC Capital Markets in New York.
    U.S. bonds weakened briefly on Wednesday as the latest
minutes from the Federal Open Market Committee showed
policymakers discussed slowing or stopping Federal Reserve bond
purchases aimed at reducing unemployment. 
    They later rebounded as a sharp fall in stock prices
rekindled some safe-haven bids for bonds.
    Benchmark 10-year Treasury notes on Thursday
were trading 10/32 higher in price to yield 1.98 percent, down
from 2.01 percent late Wednesday but still well within the 1.93
percent to 2.06 percent range that has held sway for over three
weeks.
    Treasuries prices remain underpinned by concerns over the
potential economic impact of $85 billion of automatic government
spending cuts set to kick in March 1. Few analysts expect
Republicans and Democrats to reach any sort of budget agreement
to avoid the cuts before the deadline.
    The Fed is scheduled to buy $3 billion to $3.75 billion of
Treasuries maturing November 2018 through February 2020 on
Thursday as part of its latest economic stimulus program. The
central bank is currently buying $45 billion per month of
Treasuries and $40 billion per month of mortgage-backed
securities in an effort to reduce unemployment and spur economic
recovery.
    There will also be an auction of 30-year Treasury Inflation
Protected Securities later on Thursday.
    Ahead of the sale, 30-year Treasury bonds were
trading 19/32 higher in price to yield 3.17 percent, down from
3.20 percent late Wednesday.
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