TREASURIES-Prices fall as traders prepare for supply, Fed
* Traders position for refunding announcement, Fed
* Fed's two-day policy meeting begins
* Focus on Fed meeting statement Wednesday
* U.S. non-farm payrolls due Friday will also be focus
NEW YORK, Nov 3 (Reuters) - U.S. government securities prices slid on Tuesday as traders prepared themselves for Wednesday's Treasury refunding announcement and a statement from the Federal Reserve on monetary policy.
Dealers must make room for new supply that will arrive next week, but the Treasury will announce the size and terms of those three refunding auctions on Wednesday, after which the securities can be bought and sold on a "when-issued" basis.
"You're seeing some pre-FOMC positioning and pre-refunding announcement positioning," said John Canavan, analyst at Stone & McCarthy Research Associates in Princeton, New Jersey.
The benchmark U.S. 10-year Treasury note US10YT=RR was down 15/32 in price, its yield rising to 3.48 percent from 3.42 percent late on Monday.
Thirty-year bonds US30YT=RR, in the plus column earlier in the session, were down 1-6/32, their yields rising to 4.33 percent from 4.26 percent on Monday.
The statement the Fed's Federal Open Market Committee (FOMC) will release at the end of its two-day policy meeting on Wednesday afternoon is of keen interest to the markets.
"Some movements in the capital markets today are people taking positions before the FOMC press release tomorrow afternoon," said William Sullivan, chief economist at JVB Financial Group in Boca Raton, Florida. "This is especially true in the bond market where there has been talk that the Fed could change the wording in the statement to lay the foundation for tighter monetary policy at some point in the future."
Sullivan said that despite some improved data on the housing and industrial sectors, the economic recovery process is "tenuous" and would be hurt by tighter monetary policy.
"If there's any hint from the Fed that they want to withdraw liquidity, it will be received very negatively by both the marketplace and the business community," he said.
John Spinello, chief fixed-income technical strategist at Jefferies & Co in New York, said the FOMC meeting was the "immediate focus leading to position-adjustment trading."
One point being discussed is whether more hawkish members of the Federal Open Market Committee, the Fed's policy arm, will manage to make the Fed statement slightly less dovish by removing the word "extended" from the Fed's current commitment to keep interest rates low for an extended period.
"If, in fact, (the market has a) knee-jerk reaction to an altering of the language, which we do not expect to be policy-consequential, we will look at that as an opportunity to become friendly to the front end and for the yield curve steepening bias to continue," Spinello said.
On the economic indicator front, U.S. factory orders rose in September, as forecast. The report had no discernible impact on U.S. Treasuries prices.
The most influential U.S. economic report this week is the October nonfarm payroll report due Friday.
The median of forecasts from economists polled by Reuters is for payrolls to have contracted by 175,000 in October after narrowing by 263,000 jobs in September.
In afternoon trade, two-year notes US2YT=RR were down 1/32, yielding 0.937 percent. Five-year Treasury notes US5YT=RR were down 6/32 in price, their yields rising to 2.38 percent from 2.33 percent late on Monday. (Editing by Jan Paschal)
