TREASURIES-Prices rise as Wall St wobbles, Iraq clashes

Tue Jun 24, 2014 2:46pm EDT

Related Topics

* Weakening Wall St helps Treasuries
    * Long bonds post best price gains
    * Two-year notes flat after auction

 (Adds further Treasuries gains, auction results)
    By Michael Connor
    NEW YORK, June 24 (Reuters) - U.S. Treasuries' prices rose
on Tuesday, getting a lift from investors turning away from
weakening Wall Street equities and reawakened geopolitical
worries due to fighting in Iraq.
    Gains were strongest among long maturities, with prices of
30-year Treasuries up 20/32 to yield 3.41 percent,
down from Monday's 3.46 percent. Yields on the 30-year had
earlier gone as low as 3.39 percent.
   "The equity market has ticked down," said Charles Comiskey,
head of Treasury trading at Scotia Bank in New York. "There's
some news about some (air strikes) in Iraq ...."
    Earlier, an Iraqi military spokesman said the government had
carried out air strikes on a militant gathering in the town of
al-Qaim near the Syrian border. A hospital official in Qaim said
17 people died in the strikes and 52 were wounded, a number that
was impossible to confirm independently. 
    U.S. stocks, which ended a six-day rally last week,
surrendered morning gains and turned down in early afternoon
after the Standard & Poor's 500 index of top companies had
touched a new all-time, intraday high. The Dow Jones index
 was off 0.42 percent in midafteroon.
    Wall Street prices had benefited from economic data showing
rising house prices and increasingly confident consumers.
 
    But the data portraying an improving U.S. economy did little
for bond prices, which were up early in light volumes ahead of a
sale by the U.S. Treasury of $30 billion of two-year notes.
 
    The high yield on the notes was 0.511 percent, according to
Treasury data.
    "The two-year got by with a passing grade of C minus,
staying in line with the last several auctions," said interest
rate strategist Jim Vogel at FTN Financial. "Despite the rate
increase on this (morning's) data and a stronger dollar, the
action is simply further out the curve."
    The two-year Treasury was last yielding 0.456
percent, unchanged for the day in secondary trade.
    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.
    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 in May for sales of existing homes. 
    Traders discounted the Case-Shiller data as out of date and
likely an exception to signs that the housing sector was pulling
out of a recent slump, according to money market economist Tom
Simons at Jefferies LLC.

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