TREASURIES-Yields rise on Chinese growth, rising stocks

Wed Apr 16, 2014 9:33am EDT

Related Topics

* Prices fall as China growth beats expectations, stocks
rise
    * Bonds pare some losses after US housing data disappoints
    * Yellen to speak, Fed beige book due later on Wednesday
    * Fed to buy $0.90 bln-$1.15 bln bonds due 2036-2044

    By Karen Brettell
    NEW YORK, April 16 (Reuters) - U.S. Treasuries prices fell
on Wednesday as better-than-expected growth in China helped
boost riskier assets, reducing demand for safe-haven government
bonds even as U.S. housing data disappointed.
    China, the world's second-largest economy, grew 7.4 percent
in the January-March quarter from a year earlier, the National
Bureau of Statistics said on Wednesday. That was slightly
stronger than the median forecast of 7.3 percent in a Reuters
poll but still slower than 7.7 percent in the final quarter of
2013. 
    Bonds pared some of their losses, however, after data showed
U.S. housing starts rose but below market expectations and
building permits fell in March, pointing to underlying weakness
in the housing market that could persist despite improving
weather. 
    "That momentarily took the air out of that move," said Jim
Vogel, an interest rate strategist at FTN Financial in Memphis,
Tennessee. "Of all the things the market is optimistic about for
a spring rebound, housing was the biggest question mark."
    U.S. manufacturing output rose for a second straight month
in March in a sign of recovery from a long winter that had put a
damper on activity. Factory production increased 0.5 percent in
March, according to data from the Federal Reserve on Wednesday.
 
    Benchmark 10-year notes were last down 7/32 in
price to yield 2.66 percent, down from 2.67 percent earlier on
Wednesday. The yields fell to one-and-a-half month lows of 2.60
percent on Tuesday, as concerns about escalating tension in
Ukraine sparked safety buying and a weak New York manufacturing
survey raised fears over the strength of the U.S. recovery. 
    Data this week has given mixed signals over the strength of
the U.S. economy. It comes as investors grapple with when the
Federal Reserve is likely to begin raising rates, which most see
as likely sometime next year.
    The Fed will release its Beige Book report later on
Wednesday, a collection of anecdotes from the central bank's
business contacts across the country.
    Several Fed speakers are also due to speak on Wednesday,
including Fed Chair Janet Yellen and Dallas Fed President
Richard Fisher.
    Atlanta Fed President Dennis Lockhart said on Wednesday that
the Fed should try to make its communications on the expected
path of interest rates and the economy consistent with its
policy statements. 
    The Fed will purchase between $0.90 billion and $1.15
billion in bonds due from 2036 to 2044 on Wednesday as part of
its ongoing purchase program.
    Data on Thursday including a Philadelphia manufacturing
survey will also be watched for further signals over the state
of the economy.
    Demand for inflation-linked debt will also be tested on
Thursday when Treasury sells $18 billion in five-year Treasury
inflation-protected securities, or TIPS.
    TIPS have been among the worst performing assets since the
Fed last year indicated it would begin paring its bond purchase
program, leading many to wonder what will spark inflation, which
continues to run below Fed targets of 2 percent.
    The bond market will close early on Thursday and be closed
all day on Friday for the Good Friday holiday.
    

 (Editing by Meredith Mazzilli)
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