TREASURIES-Prices gain as economic data disappoints
* Yields fall as consumer confidence, retail sales disappoint * White House says no decision yet on next Fed chair * Fed buys $3.70 bln in notes due 2019, 2020 By Karen Brettell NEW YORK, Sept 13 (Reuters) - U.S. Treasuries prices gained on Friday after weak economic data pointed to slower growth before the Federal Reserve's highly anticipated meeting next week, where it is expected to announce it will reduce it bond purchases. Yields hit session lows on Friday after data showed that consumer sentiment fell to a five-month low in September as mortgage rates rose and fears over conflict with Syria increased. Retail sales data earlier on Friday also disappointed. The Commerce Department said that retail sales increased 0.2 percent last month as Americans bought automobiles, furniture and electronics and appliances. However, they cut back on clothing, building materials and sporting goods. "We started getting some weak economic data," said Charles Comiskey, head of Treasuries trading at the Bank of Nova Scotia in New York. The White House said it had not yet made a decision on its pick to lead the Federal Reserve after a Japanese newspaper reported that Lawrence Summers would soon be named. Summers is viewed as more hawkish than Fed Vice Chair Janet Yellen, who is also seen as a leading contender for the job, and is more likely to raise interest rates at a faster pace. "The fact that the Summers story was discredited by the White House brought people back in to buy the belly of the curve," Comiskey said. U.S. benchmark 10-year Treasury notes were last up 5/32 in price to yield 2.89 percent, down from 2.91 percent late on Thursday. They have fallen from a two-year high of 3.01 percent last Friday. Thirty-year bonds rose 11/32 in price to yield 3.84 percent, down from 3.85 percent on Thursday. The weakening data comes at an awkward time for the Fed, which meets next Tuesday and Wednesday. The U.S. central bank will release the statement from its two-day meeting on Wednesday. It is seen as unlikely to sway the Fed from tapering its $85 billion-a-month bond purchase program, however, with the focus now on how much the Fed is likely to reduce purchases. "The bigger event will be next week's FOMC meeting where we're looking for the Fed to announce their tapering plans somewhere in the area of $10 billion-a-month reduction," said Sean Murphy, a Treasuries trader at Societe Generale. The Fed bought $3.70 billion in notes due 2019 and 2020 on Friday as part of its ongoing purchase program. Bonds have also gained a bid after the Treasury completed the sale of $65 billion in new debt to strong demand, in part because investors unlocked hedges placed ahead of Verizon's record-breaking $49 billion bond sale on Wednesday.
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