TREASURIES-Prices gain on safety bid as Cyprus in focus
* Prices rise on safety bid spurred by Cyprus * 10-year notes hold in range between 1.90 and 1.97 percent * Fed buys $1.46 billion in bonds due 2036-2043 By Karen Brettell NEW YORK, March 21 (Reuters) - U.S. Treasuries prices gained on Thursday as investors focused on whether Cyprus would be able to reach a deal that would enable it to avoid default and the likely collapse of its banking system. Treasuries have been boosted this week by a safe-haven bid spurred by Cyprus's troubles as investors worry that bank stress could extend to other countries, including Italy and Spain, and that Cyprus could leave the euro zone. The ECB gave Cyprus until Monday to raise billions of euros to clinch an international bailout or face losing emergency funds for its banks and the likelihood of collapse. "There's a little bit of wait and see on Cyprus," said Lou Brien, market strategist at DRW Trading in Chicago. "If they can't come up with anything and the odds of Cyprus leaving the euro zone rise, then I think that will create a flight to safety in Treasuries." Benchmark 10-year notes were last up 8/32 in price to yield 1.93 percent. The notes' yields have traded in a range between around 1.90 percent and 1.97 percent this week, after falling from around 2.06 percent last week. The debt may gain further to around the 1.90 percent yield area as investors worry about developments over the weekend. "While there are some discussions going on there doesn't seem to be any solid progress being made. I don't think people want to be vulnerable to a 'risk off' move over the weekend," said Rick Klingman, a Treasuries trader at BNP Paribas in New York. Thirty-year bonds rose 23/32 in price to yield 3.16 percent, down from 3.20 percent late on Wednesday. The Federal Reserve's latest meeting, which ended on Wednesday, did little to distract the focus from Europe. Fed Chairman Ben Bernanke said he had not yet seen meaningful changes to the troubled labor market hence the Fed's aggressive policy stimulus stance, though the central bank's policy-setting committee acknowledged brighter economic signs. The Fed bought $1.46 billion in bonds due 2036 and 2043 on Thursday as part of its ongoing bond purchase program. A resolution in Cyprus may set up Treasuries for renewed yield increases as the economy improves and investors debate when the Fed will end its bond purchases. "People are not looking to hold these positions for the next six months. If anything, they are looking at where they could set up new shorts," said Gennadiy Goldberg, interest rate strategist at TD Securities in New York. Meanwhile the Treasury said on Thursday it will sell $99 billion in new coupon-bearing debt next week, including $35 billion in two-year notes, $35 billion in five-year notes and $29 billion in seven-year notes.
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