TREASURIES-Bond prices steady as Fed meeting in focus
* Prices steady, investors focused on Wednesday's Fed meeting * Bonds yields briefly rise on Empire State data * Fed will buy $4.75 bln-$5.75 bln notes due 2018-2019 By Karen Brettell NEW YORK, June 17 (Reuters) - U.S. Treasuries were largely flat on Monday as investors looked ahead to a key meeting of the Federal Reserve, concluding on Wednesday, that will be scrutinized for clarity about whether the U.S. central bank is close to paring back on its bond purchase program. Wednesday's announcement, to be followed by a press conference with Ben Bernanke, has taken on a greater significance since the Fed chairman said last month that the U.S. central bank may decide to pare purchases in the next few meetings if the economy gains maintains momentum. The comments sparked a surged in Treasuries yields and a dramatic uptick in volatility as investors evaluated the effect if the Fed stops expanding its balance sheet. "It's all about the Fed. You're going to continue to see extreme volatility around these Fed meetings just because of what the Chairman has stated," said Dan Mulholland, managing director in Treasuries trading at BNY Mellon in New York. Many economists see the economy on a stronger footing that will enable to Fed to pull back some of its stimulus. Most economists expect the Fed will reduce its purchase program by the end of year and a large number expect less buying as early as September, according to a Reuters poll. At the same time, a number of traders and investors are also concerned that ongoing purchases are creating market dislocations that will make an exit harder and adding to risks that the Fed will create new asset price bubbles. A Wall Street Journal article on Thursday stating that the Fed is unlikely to end all of its purchases at once, and is still far away from raising rates, prompted a strong Treasuries rally and pushed back expectations of tapering. "We were priced for imminent tapering this summer, and that's now been pushed back to year end or first quarter of next year," said Mulholland. Benchmark 10-year Treasuries were last unchanged in price to yield 2.13 percent. They had fallen from a more than 13-month high of 2.29 percent last Tuesday, but remain significantly higher than the 1.60 percent area they traded at in early May. Thirty-year bonds fell 4/32 in price to yield 3.31 percent, down from a more than 13-month high of 3.43 percent last Tuesday, and up from 2.82 percent at the beginning of May. The Fed will purchase between $4.75 billion and $5.75 billion in notes due 2018 and 2019 on Monday as part of its ongoing purchases. Treasuries prices earlier briefly fell and yields rose after data showed that growth in the New York state manufacturing sector picked up in June, though the details showed a contraction in new orders and measures of employment weakened.
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