TREASURIES-Prices rise after strong debt auction
* Fed speakers, weak data help stabilize markets * Treasury sells $29 bln of 7-year notes at highest yield since July 2011 * Fed buys $5.05 billion in notes due 2017, 2018 By Luciana Lopez NEW YORK, June 27 (Reuters) - U.S. Treasuries prices gained on Thursday as bond markets showed signs of stabilizing after a dramatic selloff, as a sale of 7-year debt drew more aggressive bidding than markets had expected. The $29 billion of 7-year notes fetched a high yield of 1.932 percent - the highest since July 2011, but still less than the market had expected. Indirect bidders bought their biggest share since August 2011. The auction "brought a renewed trading spark that punched through levels not touched since noon last Friday," said Jim Vogel, an interest rate strategist at FTN Financial in Memphis, Tennessee. Treasuries slumped last week after U.S. Federal Reserve Chairman Ben Bernanke said the Fed could pull back on its $85-billion-per-month bond buying program soon as the economy improves. But prices have largely firmed this week after the selloff took yields to their highest in 22 months. Also helping Treasuries recover was weaker-than-expected GDP data this week for the first quarter, suggesting to some analysts that the Fed might not find the economy ready to stand on its own for months. Fed officials have also tried to calm markets this week, emphasizing that the U.S. central bank is not trying to clamp down on policy too soon. "The Fed has made efforts to talk the market back from those assumptions" that the Fed is likely to start paring its bond purchases in September, said Ian Lyngen, senior government bond strategist at CRT Capital Group in Stamford, Connecticut. Among those speakers were New York Fed President William Dudley and Fed Governor Jerome Powell on Thursday. Each sought to dissuade investors that monetary accommodation was fading any time soon, going so far as to say markets have misinterpreted the U.S. central bank's intentions. As part of its ongoing stimulus, the Fed bought $5.05 billion in notes due 2017 and 2018 on Thursday. Benchmark 10-year note yields have backed away from 22-month highs of 2.67 percent, reached on Monday. Those notes traded up 16/32 in price to yield 2.481 percent on Thursday. The notes' yields nonetheless remain significantly higher than the 2.20 percent area they traded at before Bernanke's comments, and above 1.60 percent at the beginning of May. "We've found a new range. We think we'll stay in this range, in the mid-2.40s to mid-2.60s, for the next week and then payrolls will be a determining factor," said Ira Jersey, an interest rate strategist at Credit Suisse in New York. The payrolls report due next Friday comes the day after the U.S. Independence Day holiday, which may reduce volumes and make trading on the number more volatile.