TREASURIES-Prices rise after strong 30-year debt sale
* Prices gain after Verizon's record bond, debt sale * Weak euro zone factory output adds to bond bid * Treasury sell $13 bln in 30-year bonds at high yield of 3.820 pct * Fed buys $3.36 bln notes due 2021-23 By Karen Brettell and Luciana Lopez NEW YORK, Sept 12 (Reuters) - Prices for U.S. Treasuries edged higher on Thursday after investors worked through a mammoth week of new corporate and government bond supply, with a strong sale of 30-year bonds capping $65 billion in new U.S. debt this week. The Treasury sold $13 billion of the 30-year debt at a high yield of 3.820 percent, lower than the market had expected, with a strong direct bid. Thursday's sale came after similarly well-received auctions on Tuesday and Wednesday for three-year and ten-year notes, respectively. "It's interesting that all three auctions stopped through this week," said Ian Lyngen, senior government bond strategist at CRT Capital. The record $49 billion Verizon bond deal, as expected, traded well on the open market on Thursday, with the prices rising sharply from the price levels set in the primary market on Wednesday. "The Verizon deal rallied sharply after its issuance, and direct bidding of Treasuries was elevated across all three sectors. It was a good week for U.S. fixed income," Lyngen said. Yields have jumped since May on views the U.S. Federal Reserve will soon slow its $85 billion per month buying of Treasuries and mortgage-backed securities. The jump of more than 100 basis points has taken benchmark yields to two-year highs recently. "The market had built in a huge concession for supply, and now the supply is eliminated and the areas that were beat up the most will recover the most," said Tom Tucci, head of Treasuries trading at CIBC, noting that 10-year notes and 30-year bonds had taken the brunt of the selling. U.S. benchmark 10-year Treasury notes were last up 6/32 in price to yield 2.892 percent, from 2.91 percent late on Wednesday. They have fallen from a two-year high of 3.01 percent on Friday. Thirty-year bonds rose 13/32 in price to yield 3.829 percent, down from 3.85 percent on Wednesday. A drop in euro zone factory output also raised new fears over global growth on Thursday, hurting shares and adding demand for U.S. bonds. Treasuries temporarily pared price gains on Thursday after data showed that the number of U.S. jobless claims fell sharply last week, though much of the decline appeared due to technical problems in claims processing. Demand was strong for the Treasury's $21 billion 10-year note reopening on Wednesday, helped by hedge unwinds from the Verizon sale. Investors are now awaiting a Fed meeting next week on Tuesday and Wednesday. Policymakers are expected to taper bond buying despite a weaker-than-expected employment report last Friday, which reduced expectations of how large any cut will be. Economists told Reuters after the latest jobs report they now expect the Fed to begin paring its purchases of Treasuries and mortgage-backed securities by $10 billion a month, less than the $15 billion median reduction in Friday's primary dealer poll and a wider poll in August. The Fed bought $3.36 billion in notes due 2021 to 2023 on Thursday as part of its ongoing asset-buying program.
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