TREASURIES-Bond prices edge lower on stronger U.S. housing, factory data

Thu May 22, 2014 4:10pm EDT

Related Topics

* April existing home sales up 1.3 pct
    * Manufacturing grows more than expected in May
    * Weekly jobless claims close to seven-year low
    * Treasury sells $13 bln in 10-yr TIPS to solid demand

 (Updates prices, adds new comments)
    By Sam Forgione
    NEW YORK, May 22 (Reuters) - U.S. Treasuries prices edged
lower on Thursday after stronger  economic data on U.S. existing
home sales and factory activity lifted sentiment, while
larger-than-expected weekly jobless claims failed to spur
safe-haven bids. 
    The National Association of Realtors said existing home
sales increased 1.3 percent to an annual rate of 4.65 million
units in April, marking the second sales increase in nine
months. 
    Financial data firm Markit, meanwhile, said its preliminary
or "flash" U.S. Manufacturing Purchasing Managers Index rose to
56.2 in May from 55.4 in April. Economists polled by Reuters
expected a reading of 55.5. 
    "To justify a further fall in yields, we would need to see
worse economic data," said Anthony Valeri, market strategist at
LPL Financial in San Diego. 
    Data showed the number of Americans filing new claims for
unemployment benefits was up 28,000 at 326,000 in the week ended
May 17, above the 310,000 forecast but still near a seven-year
low, pointing to ongoing healing in the labor market.
 
    Prices on 30-year Treasury bonds were last down
6/32 to yield 3.427 percent, from a yield of 3.416 percent late
Wednesday. Benchmark 10-year Treasury notes were
last down 4/32 in price to yield 2.5517 percent, from 2.536
percent late Wednesday.
    Two-year Treasury notes last traded roughly flat, to yield
0.346 percent, from 0.339 percent late Wednesday.
    Traders also digested minutes from the Federal Reserve's
April policy meeting released Wednesday, which suggested that
the central bank was in no hurry to raise interest rates. 
    By purchasing $45 billion in bonds per month while keeping
interest rates low, the Fed is injecting liquidity into the
economy and generating greater expectations of inflation, which
pushes up yields on longer-dated bonds, noted Jonathan Lewis,
chief investment officer at Samson Capital Advisors in New York.
    The U.S. Treasury sold $13 billion in 9-3/4
inflation-indexed notes on Thursday. Indirect bidders, which
include foreign central banks, bought a record high share of the
notes, according to analysts. 
    The Fed bought $0.97 billion in Treasuries maturing between
November 2039 and August 2043 as part of its ongoing purchases,
which had a muted impact on Treasuries prices.
    Traders also said slight gains in U.S. stocks weighed on
Treasuries prices. The benchmark S&P 500 stock index was
last up 0.24 percent. 


 (Reporting by Sam Forgione; Editing by Tom Brown and Dan
Grebler)
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