TREASURIES-U.S. debt prices fall before 10-year bonds auction

LONDON, April 10 Wed Apr 10, 2013 5:15am EDT

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LONDON, April 10 (Reuters) - U.S. bonds weakened on Wednesday, pushing T-note yields further away from last week's four-month lows, as investors made room in their books for the 10-year paper due to be auctioned later in the day.

The Treasury plans to sell $21 billion in 10-year notes on Wednesday and $13 billion in 30-year bonds on Thursday.

While supply pressure was expected to weigh on prices near-term, analysts expected U.S. Treasuries to resume last week's rally which followed the Bank of Japan's announcement of plans for an unprecedented $1.4 trillion stimulus plan.

Investors speculate that cash from Japan may spill over into other regions in search of higher yields and assets denominated in other currencies than the rapidly-weakening yen.

U.S. T-note yields were 1.9 basis points higher on the day at 1.7708 percent, compared with a four-month low of 1.667 percent that was hit last week on the back also of a weak U.S. jobs report .

"We are getting a bit cheaper today because we have a 10-year (auction) coming up," one trader said. "I think we can sell a bit more till 1.80 (percent in 10-year yields)."

"A lot of people jumped last week on Treasuries anticipating Japanese buying. It was maybe too soon, but it doesn't mean it was wrong. I would like to get long after the auctions."

T-note futures were 7/32 lower at 132-19/32.

Tomohisa Fujiki, interest rate strategist for BNP Paribas in Tokyo, expected 10-year yields to move in a range of about 1.6 percent to 1.85 percent for the rest of April.

"Such hope, or concern, that Japanese players might buy (Treasuries) seems unlikely to disappear soon," he said.

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