TREASURIES-Prices rise, yields slip on soft U.S. consumer confidence

Tue Feb 25, 2014 11:25am EST

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* Gains strongest in 30-year bond

* Focus on weak consumer confidence

* Traders shrug off sunny housing price report

By Michael Connor

NEW YORK, Feb 25 (Reuters) - U.S. Treasuries' prices rose on Tuesday as traders focused on a drop in U.S. consumer confidence and discounted stronger-than-expected data showing U.S. home prices last year climbed the most since 2005.

Gains were biggest in 30-year Treasury bonds.

After falling on Monday, the issue was up 26/32 of a point in price after release of The Conference Board's index of consumer confidence, which showed a disappointing drop in February. That left the 30-year yield at 3.666 percent, compared with 3.701 percent on Monday.

Benchmark 10-year U.S. Treasury notes also rose and were up 11/32 in price to yield 2.710 percent, down from 2.745 percent on Monday.

Shorter maturities were mixed, with more modest gains or small price declines.

The market's reaction to the drop in the confidence index might be overdone, TD Securities strategist Gennadiy Goldberg said in a commentary.

"The decline in the index was solely caused by a fall in the expectations component of the survey...," Goldberg said. "We look for the removal of debt ceiling uncertainty and a recovery in equity prices to help support the expectations component of the index in future months, with confidence continuing to show modest improvement."

Treasury prices rose in early New York trading and reacted little to release of the S&P/Case-Schiller composite index of 20 metropolitan areas that showed a better-than-forecast 0.8 percent rise in single-family home prices during December from November.

The index also showed a 13.4 percent year-on-year rise, which S&P Dow Jones Indices said was the best annual increase in eight years.

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