TREASURIES--Prices steady after data shows expected lift to economy

Thu Feb 20, 2014 10:26am EST

Related Topics

* Fed to buy $2.25 bln-$2.75 bln in notes maturing between 2021 and 2024

* Jobless claims, PMI and CPI data optimistic, but expected

* Disappointing PMI data from Europe and China raises trading volume overnight

By Marina Lopes

NEW YORK, Feb 20 (Reuters) - U.S. Treasuries prices were little changed on Thursday as mostly positive economic data met expectations and barely affected prices.

The data showed that fewer Americans filed for unemployment last week, consumer prices inched higher in January and manufacturing activity accelerated at its fastest pace in nearly four years.

Factory activity in the mid-Atlantic region unexpectedly contracted, data released by the Philadelphia Federal Reserve Bank showed, with new orders plunging far below estimates. The contraction, however, did not significantly impact yields.

"The fact that we are not seeing a great deal of price action as a result of the morning release of economic data is largely a function of the fact that they were a concern," said Ian Lyngen, an interest rate strategist at CRT Capital.

"Given the relatively uneventful data, it was priced in and that is why the market's response has been fairly muted," Lyngen said.

Benchmark 10-year note yields reached session highs of 2.75 following the manufacturing data.

The 10-year notes were unchanged in price to yield 2.73 percent. Thirty-year bonds gained 6/32 in price to yield 3.70 percent, down from 3.71 percent.

"There has not been a great deal of dramatic events from either the Fed or the data itself. We are trading off of what is going on in emerging markets and domestic equities. The residual of these issues are flowing through to the Treasury markets," said Lyngen.

Overnight, disappointing PMI data from Europe and China pushed up trading volumes to 150 percent of average, analysts said.

The Fed will buy between $2.25 billion and $2.75 billion in notes maturing between 2021 and 2024 as a part of its continuing bond buying program on Thursday.

Investors will monitor existing home sales data, set to be released on Friday, but they said they expect consumer confidence figures, due on Tuesday, to have a more significant impact on the market.

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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