TREASURIES-Prices little changed as global woes offset U.S. data

Fri Mar 15, 2013 9:34am EDT

Related Topics

* Appetite for riskier assets offset by global growth
concerns
    * Fed not expected to halt asset purchases anytime soon
    * Lipper data shows money flowing out of bond funds in the
latest week

    By Chris Reese
    NEW YORK, March 15 (Reuters) - U.S. Treasury debt prices
were little changed on Friday as a recent string of upbeat U.S.
data was offset by lingering demand for safety against an
uncertain global backdrop.
    U.S. data has fueled optimism about the global economy,
showing this week that the number of Americans filing new claims
for unemployment benefits dropped last week, while retail sales
expanded at their fastest clip in five months in February. Data
late last week also showed robust U.S. jobs growth in February
and a dip in the unemployment rate.
    Still, some investors say there has not been enough evidence
of a recovery to spur Federal Reserve officials to remove their
economic stimulus of buying $85 billion per month of
mortgage-backed securities and Treasuries any time soon.
    "The doves on the committee will unequivocally want to see
more progress made on the employment backdrop before they even
contemplate tightening the reins on the latest round of
(quantitative easing)," said Michael Cloherty, head of U.S.
rates strategy at RBC Capital Markets in New York.
    The Fed's policy-setting Federal Open Market Committee will
meet on Tuesday and Wednesday of next week, although Cloherty
said it is unlikely to signal a slowing of debt purchases just
yet.
    "We will need to see the current pace of job gains and
declining unemployment rate continue for a few more months
before the discussion about tapering really begins to develop
some teeth," he said.
    However, investors may be getting nervous about the future
of their Treasury holdings.    
    Bond funds had their weakest turnout this year as investors
committed just $1.23 billion in the week ended March 13, data
from Thomson Reuters Lipper service showed on Thursday. That is
the smallest inflow since the funds suffered outflows of $331.2
million over the week ended Jan. 2.
    Outflows from Treasuries in the week ended Wednesday were
$1.07 billion, which was the largest amount of outflows since
the week ended Oct. 10. Investors seemed to be putting their
money into corporate debt, as inflows to corporate
investor-grade funds were $2.13 billion in the week, which was
the largest since the week ended Jan. 9.
    Benchmark 10-year Treasury notes on Friday were
trading 1/32 higher in price with their yield little changed
from Thursday at 2.04 percent, while 30-year bonds were yielding
3.24 percent, which was down slightly from a high yield of 3.25
percent in an auction of $13 billion of reopened 30-year bonds
on Thursday.
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