TREASURIES-Prices bounce back; traders shrug off soft homes-sales data

Tue Jun 24, 2014 11:17am EDT

Related Topics

* Case-Shiller data weaker than forecast
    * Gains best in long issues
    * $30 billion two-year notes auction ahead

    By Michael Connor
    NEW YORK, June 24 (Reuters) - U.S. Treasuries' prices
bounced back on Tuesday from a sell-off as traders shrugged off
housing data showing American home price increases fell short of
forecast during April.
    Benchmark 10-year notes were up 7/32 to yield
2.597 percent, versus 2.63 percent late on Monday. The 10-year
notes yielded 3 percent at the beginning of 2014 and have been
trading in a tight range around 2.60 percent since February.
    Prices of 30-year Treasuries were up 19/32 to
yield 3.41 percent, down from Monday's 3.46 percent.
    The price gains widened after the closely watched
S&P/Case-Shiller survey of single-family home prices showed a
0.2 percent rise on a seasonally adjusted basis during April,
far short of a 0.8 composite forecast. 
    Investors on Monday got upbeat news about U.S. housing
values, which are tracked as central to consumer purchasing
power, when the National Association of Realtors reported a 4.9
percent jump during May for sales of existing homes.
 
    Traders discounted the Case-Shiller data as out of date and
likely an exception to signs the housing sector was pulling out
of a recent slump, according to money market economist Tom
Simons at Jefferies LLC.
    "Case-Shiller not only lags but it comes out after the
existing home sales yesterday, which were fairly strong," Simons
said. "I am surprised at the gains since there's usually
concessions ahead of auctions."
    Shorter-maturity Treasuries showed more modest gains or were
flat.
    Ahead of a $30 billion U.S. Treasury auction in the issue
set for later Tuesday, two-year notes were up 1/32 to
yield 0.4767 percent.
    "We largely expect to see solid demand given recent
cheapening in the sector," Gennadiy Goldberg, U.S. strategist
for TD Securities, said. "With the two-year (when issued) yield
currently trading near 0.5 percent (set to be the highest
awarded yield since May 2011), we expect strong demand for the
issue."

 (Reporting By Michael Connor in New York; Editing by Tom Brown)
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