TREASURIES-Yields rise from near three-month lows

Mon Feb 3, 2014 9:51am EST

Related Topics

* Yields rise as European economic data seen strong
    * Emerging markets calmer, reducing Treasuries' safety bid
    * Fed to buy $1 bln - $1.25 bln bonds due 2036-2043

    By Karen Brettell
    NEW YORK, Feb 3 (Reuters) - U.S. Treasuries yields rose from
near three-month lows on Monday as solid European economic data
and calmer emerging markets assets reduced demand for safe-haven
U.S. debt.
    Manufacturers around the world enjoyed a solid start to the
year as order books swelled, surveys showed on Monday, though a
struggle for growth in China and a downturn in France took the
shine off the overall picture. 
    Treasuries held price losses after data showed that U.S.
manufacturing also grew less briskly in January after hitting an
11-month high the prior month as output and overseas demand
slowed. 
    Benchmark 10-year yields have dropped to the lowest levels
since November as volatility in emerging markets that some blame
on the U.S. Federal Reserve's attempts to reduce stimulus lead
investors to seek the safety of U.S. bonds.
    On Monday investors sold into that strength as they
continued to weigh whether the rout in emerging market assets is
likely to continue. 
    "There is maybe a little bit of selling into the strength
we've seen in the markets, and equities and emerging markets
look a little calmer today," said Justin Lederer, an interest
rate strategist at Cantor Fitzgerald in New York.
    Last week's rally was helped by purchases by investors
rebalancing portfolios for month-end, and by short-covering by
investors who had positioned for higher yields.
    Ten-year notes were last down 7/32 in price to
yield 2.679 percent, up from 2.646 percent on Friday, which was
the lowest level since November 8.
    The next main focus for investors will be Friday's highly
anticipated employment report for January, which will be watched
to see if there was any weakness in hiring that could
potentially lead the Fed to slow or pause its reduction in its
monthly bond purchases.
    The U.S. central bank last week to cut its monthly asset
purchases by $10 billion to $65 billion.
    The Fed will buy Treasuries every day this week as part of
its ongoing purchases, including two separate operations on
Wednesday. On Monday the Fed will buy between $1 billion and
$1.25 billion in bonds due 2036 and 2043.
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