TREASURIES-Prices steady as investors look ahead to Bernanke testimony
* Bernanke's testimony Tuesday to be parsed for asset purchase clues * ECB loan payback news offsets rise in German sentiment * Benchmark U.S. yields remain locked in a tight 13 bps range By Chris Reese NEW YORK, Feb 22 (Reuters) - U.S. Treasuries were trading little changed in price on Friday with nothing in the way of U.S. economic data to influence the market as investors looked ahead to testimony next week from Federal Reserve Chairman Ben Bernanke. Treasuries began the day trading lower in price, with traders citing a small increase in selling pressure after the release of the German Ifo sentiment survey, which beat forecasts and offset some of the gloom of downbeat data elsewhere in the euro zone earlier this week. Losses were tempered however by news that banks around Europe will repay less than half the expected amount of crisis loans they took from the European Central Bank a year ago, which suggested much of the euro zone financial system was still dependent on cheap ECB funds. Treasury debt prices were also supported by worries over the economic impact of automatic U.S. government spending cuts set to begin March 1. Few analysts expect Democrats and Republicans to reach a budget agreement ahead of the deadline to avert cuts. Investors were also reluctant to part with lower-risk assets like Treasuries heading into an Italian election on Sunday and Monday as the country struggles in a deep recession. In the absence of economic data on Friday, investors were looking ahead to testimony from Fed Chairman Bernanke on Tuesday for any clues as to when the central bank might consider winding down its stimulus program of asset purchases, under which it is currently buying $85 billion per month of Treasuries and mortgage-backed securities. The latest minutes from the Federal Open Market Committee, released this week, showed policymakers discussed slowing or stopping Fed bond purchases aimed at reducing unemployment. "The next big event for the marketplace will be Bernanke's testimony next Tuesday at 10 a.m. (EST). We look for that testimony to be a bit dovish in nature, reinforcing his view that quantitative easing will continue for the foreseeable future," said Tom di Galoma, managing director at Navigate Advisors LLC in Stamford, Connecticut. While speculation over whether the Fed will wind up its purchase program this year has bounced Treasuries around this week, benchmark yields remain locked in a 13 basis point range of 1.93 percent to 2.06 percent that has held for nearly a month. On Friday, 10-year notes were trading unchanged in price to yield 1.97 percent. "This begins the 19th session in a row where tens have traded within 5.5 basis points of 2 percent, which maybe shouldn't be all too surprising given the rate repressed environment, even after Fed Minutes and deluge of data from the past couple of days," wrote RBS' Gabriel Mann, William O'Donnell and John Briggs.
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