TREASURIES-Prices slip as stocks gain; nonfarm payrolls awaited
* Waning of worries on Syria erodes safety bid for Treasuries
* U.S. nonfarm payrolls data on Friday will be key
* Fed buys $1.47 billion in long-dated Treasuries
By Luciana Lopez and Richard Leong
NEW YORK, Sept 4 (Reuters) - Prices for U.S. Treasuries slipped on Wednesday as fears of a Western-led military strike against Syria ebbed, pushing investors into riskier assets such as stocks.
Strong auto sales data also helped pull investors into equities and away from safe-haven assets such as U.S. Treasuries.
But investors were reluctant to push prices too far ahead of nonfarm payrolls data on Friday, which will help guide the Federal Reserve's decision on when to slow its $85 billion per month in buying of Treasuries and mortgage-backed securities.
"The bond market did see some flight to quality last week when there was more tension regarding Syria," said Kim Rupert, managing director of fixed income analysis at Action Economics in San Francisco.
"But the fact that the U.S. has delayed on a strike has unwound some of the safe-haven buying and has given equities a leg higher," she added.
The United States is weighing military action against Syria in response to its use of poison gas that U.S. officials say killed 1,429 civilians last month.
But with U.S. President Barack Obama seeking Congressional approval for such a strike, it remains unclear when or if such an intervention might happen.
"People are waiting for what happens with Syria. It might be positive for Treasuries," said Justin Lederer, Treasury strategist with Cantor Fitzgerald in New York.
Still, the main event for the bond market this week is the government's payrolls report on Friday. Strong jobs gains would seal expectations the Fed will scale back its bond purchases soon, while a weak figure would revive bets the U.S. central bank would delay such a move.
Economists polled by Reuters forecast U.S. employers added 180,000 jobs in August, leaving the unemployment rate unchanged from July at 7.4 percent, the lowest since December 2008.
The Fed's next policy meeting will be on Sept. 17-18.
Other recent data suggested the U.S. economy, while still growing, has slowed due to sluggish global demand and a spike in mortgage rates.
The government reported the U.S. trade gap grew a tad more than expected in July as exports slipped after contributing to a huge contraction in the deficit in June.
Benchmark 10-year Treasury notes dipped 9/32 in price to yield 2.897 percent, from 2.863 percent late Tuesday.
The 30-year bond slid 6/32 in price to yield 3.804 percent, compared to 3.793 percent late on Tuesday.
While trading in longer-dated debt yields has been volatile on worries about smaller Fed purchases, short-to-medium-term yields have risen to their highest in over two years on speculation over the timing of the Fed's first rate increase.
"The market is adjusting to the idea that low rates are not going to be here forever," said Thomas Roth, executive director of U.S. government bond trading at Mitsubishi UFJ Securities USA in New York.
The yield on two-year Treasuries was last 0.454 percent, up from 0.418 percent late on Tuesday, while the yield on five-year notes was 1.730 percent compared to 1.682 percent late on Tuesday.
- U.S.' Kerry expresses regret to India over diplomat case |
- Washington, DC city council raises minimum wage to $11.50/hr in 2016
- China confirms near miss with U.S. ship in South China Sea
- Mega Millions winners in Georgia, California to split $648 million |
- Medical bills underlie 60 percent of U.S. bankrupts: study