TREASURIES-Prices pare recent gains on China, Italy worries

Mon Mar 4, 2013 11:01am EST

Related Topics

* Investors eyeing ECB on Thursday, jobs data Friday
    * China's move to cool property market stokes growth worries
    * Italy edges closer to another election

    By Luciana Lopez
    NEW YORK, March 4 (Reuters) - U.S. Treasury debt prices fell
on Monday as investors weighed recent price gains against
political uncertainty in Italy and growth fears in China.
    U.S. government debt stayed well within recent ranges,
despite choppy trading. 
    Treasuries could likely stay rangebound, as well, for much
of the week, as markets wait for a European Central Bank meeting
on Thursday and key U.S. jobs figures on Friday.
    "The market's a bit expensive to really go 'gung-ho' and buy
at this point even though there's a lot of risk," said Kim
Rupert, managing director of global fixed income analysis at
Action Economics LLC in San Francisco.
    Prices for 10-year Treasuries slipped 4/32 to
yield 1.858 percent on Monday, from 1.8446 percent late on
Friday. 
    Prices for 30-year bonds fell 6/32 to yield
3.064 percent, despite having risen earlier in the session.
    Investors were nervous China's government actions to cool
the heated property market could weigh on growth.
 
    Ongoing political turmoil in Italy also dented investor 
appetite for risk. After last month's inconclusive election, the
country could be inching closer towards another vote within
months. 
    "It's less about Italy per se than voter and political
reaction to austerity," said Jim Vogel, interest rate strategist
at FTN Financial in Memphis.
    Those reactions to budget austerity have broader
implications for much of Europe. While the euro zone sovereign
debt crisis has quieted recently, problem spots such as Spain
and Italy remain. 
    Nor are the problems confined to the monetary union, as
worries have flared recently about the possibility of another
slide into recession in the United Kingdom. 
    Investors this week will eye the ECB's rate decision on
Thursday. With analysts in a Reuters poll expecting policymakers
to stand pat, a surprise rate cut could jolt markets.
    On Friday, investors will wait for key U.S. jobs data.
Analysts in a Reuters poll see non-farm payrolls rising by
160,000. The U.S. Federal Reserve has emphasized the need to see
a lower unemployment rate in weighing monetary policy. 
    Until that rate, currently at 7.9 percent, edges closer to
the bank's goal of 6.5 percent, analysts say the bank is
unlikely to tighten its ultra-loose policy.
    Janet Yellen, the Federal Reserve's influential vice chair,
said on Monday the U.S. central bank's aggressive monetary
stimulus is warranted given how far the economy was operating
below its full potential. 
     Yellen said Fed officials expect the unemployment rate to
come down all too slowly to around 7 percent at the end of next
year.
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