Hot sectors in a tepid recovery
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TREASURIES-Long-dated debt falls on data, TIPS sale looms
* Stronger-than-expected US ISM services data hit long end
* ISM services sector index creeps closer to 50 threshold
* Treasury to sell $8 bln in 10-year inflation securities
* Fed to buy debt maturing in 4 to 7 years
(Updates market action after ISM data)
NEW YORK, July 6 (Reuters) - Longer-maturity U.S. Treasury debt prices fell on Monday, as a stronger-than-expected report on U.S. services industries revived hopes of an economic rebound later this year.
A restoration of economic growth exerts upward pressure on inflation and erodes the value of long-dated Treasuries.
The Institute for Supply Management's latest snapshot on the vast services sector -- which accounts for more than 80 percent of the U.S. economy -- mitigated some of the economic worries from last Thursday's weak jobs report.
The ISM index on the services sector rose to 47.0 in June from 44.0 in May, a tad higher than a median forecast of 46.0. The dividing line between growth and contraction is 50. See [ID:nWEN0263]
"The details look fairly good. There is a bit of a negative reaction in bonds, especially ahead of supply," said Carl Lantz, interest rate strategist at Credit Suisse in New York.
This week's Treasury coupon supply of $73 billion kicks off with a $8 billion auction of 10-year Treasury Inflation-Protected Securities (TIPS) later Monday.
It is unclear what the demand will be for bonds that offer inflation protection when recent data and Fed officials have suggested price pressures will stay mild into 2010, analysts said.
The TIPS auction will be followed a $35 billion sale of new three-year notes on Tuesday; $19 billion auction of older 10-year debt on Wednesday and $11 billion re-opening of 30-year bonds on Thursday.
Meanwhile, the Federal Reserve will buy Treasuries maturing in four to seven years as part of its quantitative easing program to stimulate the economy.
Benchmark 10-year Treasury notes US10YT=RR were down 9/32 in price at 96-18/32. Their yield, which moves inversely to their price was 3.54 percent, up from 3.50 percent on Thursday and below an eight-month high of 4.00 percent hit last month.
The U.S. bond market was closed on Friday in observance of the U.S. Independence Day holiday.
(Additional reporting by Burton Frierson, Editing by Chizu Nomiyama)
