TREASURIES-Prices dip in year's first trading day

Thu Jan 2, 2014 9:17am EST

Related Topics

* Volumes could continue light on Thursday
    * Jobless claims dip but seasonality clouds data value
    * Manufacturing data due late in session

    By Luciana Lopez
    NEW YORK, Jan 2 (Reuters) - Prices for U.S. Treasuries slid
on Thursday in the first trading day of the year, pushing yields
further up to multi-year highs as investors looked ahead to key
manufacturing data.
    Data early in the session showed the number of Americans
filing new claims for unemployment benefits fell for a second
week last week, adding to recent evidence that the U.S. economic
recovery is gathering momentum. 
    But analysts cautioned that the data reflected seasonal
volatility, muting the figures' impact on the market.
    "This one's not really worth paying attention to until about
the end of January, when we should start to see what I would say
are cleaner claims number" as the holiday season's effects fade,
said Gennadiy Goldberg, a U.S. strategist with TD Securities in
New York.
    "I still think the trend is lower," he added.
    Nonetheless, the data seem to reflect relatively little
volatility, said Jacob Oubina, senior economist at RBC Capital
Markets in New York.
    "It's shocking how stable the number is given all the
volatility we have this time of the year from the seasonal
adjustments and holiday retail hiring," he said. "So from that
perspective, that's a welcome sign."
    Instead, Goldberg said, markets were looking to figures on
the U.S. manufacturing sector in December, due at 10 a.m. (1500
GMT). Analysts in a Reuters poll expect manufacturing growth to
slow slightly after hitting a two-and-a-half-year high in
November.
    Volumes, low in recent sessions, could continue light on
Thursday, with many traders still out on end-of-year holidays.  
     
    The U.S. 30-year bond fell 4/32 in price to
yield 3.949 percent from 3.942 percent late on Tuesday.
    The 10-year Treasury note slid 2/32 in price to
yield 3.013 percent, compared to 3.006 percent late on Tuesday.
Markets were closed on Wednesday for the New Year's holiday.
    The 10-year yield broke above the psychologically key number
of 3 percent last week, hitting its highest in more than two
years after the Federal Reserve last month said it would slow
its massive bond-buying program.
    
   
    The pullback in the Fed's purchases, to $75 billion per
month in Treasuries and mortgage-backed securities from $85
billion, capped months of speculation about when the U.S.
central bank might see enough improvement in the world's biggest
economy to withdraw some of its stimulus.
    That speculation helped drive a jump of about 125 basis
points in the benchmark U.S. 10-year yield last year.
    Nevertheless, Fed policymakers have suggested they will hold
short-term interest rates near zero for an extended time.
    Now investors are looking to see how the Fed might act under
a new chair, Janet Yellen, expected to take the reins from Ben
Bernanke in the first quarter.
    Yellen is widely perceived as dovish, with a close interest
in boosting employment.
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