TREASURIES-Prices slip in light trading, Fed buys bonds
* Prices slip in light trade, market closes early on Tuesday * Fed buys $1.58 bln in bonds due 2036-2043 * CME to adjust some bond futures after price spike By Karen Brettell NEW YORK, Dec 23 (Reuters) - U.S. Treasuries prices slipped on Monday in light trading and five-year note yields rose to more than two-month highs as investors unwound trades made before last week's Federal Reserve meeting. Intermediate-dated debt has underperformed since the Fed said last Wednesday it would reduce the size of its bond purchase program by $10 billion to $75 billion in January. Much of the poor performance was likely due to traders pulling out of bets that the yield curve was set to steepen. "There was some poor positioning, people thought the curve would steepen out and you've seen some unwinds of the steepening trade, which has hurt the belly," said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. Five-year notes were last down 1/32 in price to yield 1.69 percent. The yields have risen from around 1.50 percent before the Fed's statement. Benchmark 10-year notes fell 4/32 in price to yield 2.91 percent. They have risen from 2.84 percent in the same time-frame. The Fed bought $1.58 billion in bonds due 2036 and 2043 on Monday in its only buyback this week. The bond market closes early on Tuesday, and will be closed Wednesday for the Christmas holiday. The CME said it would adjust the price for some March 14 bond futures trades after the contracts saw an unusual price spike in overnight trading. The futures move caused a corresponding plunge in thirty-year bond yields, which fell as much as 40 basis points to around 3.50 percent, according to some price indications. The yields quickly recovered and were last trading at 3.83 percent.