(Refiles to fix date in dateline)
* Stocks rise 1 percent after CBO sees lower debt-to-GDP
* July U.S. durable goods orders stronger than expected
* Sale of $35 bln 5-yr notes needs yield of 1 pct-Nomura
(Changes first paragraph, adds Congressional Budget Office,
comment, updates prices)
By Emily Flitter
NEW YORK, Aug 24 Prices of U.S. Treasuries fell
on Wednesday amid a suddenly brightening economic outlook on a
report durable goods orders rose more than expected in July.
Major stock indexes gained nearly 1 percent, also
pressuring Treasuries, after the nonpartisan Congressional
Budget Office forecast a lower debt-to-GDP ratio in the coming
"We're looking for more confirmation of weakness in the
economy; when we don't get it the Treasury bulls start
scrambling," said David Coard, head of fixed income sales and
trading at Williams Capital in New York.
New orders for long-lasting U.S. manufactured goods rose on
strong demand for aircraft and motor vehicles, the Commerce
Department said. [ID:nCAT005498]
Inflation concerns drove the 30-year bond to a loss of
nearly a point.
"I started noticing Treasuries fade after the
stronger-than-expected durable goods number," Coard said.
"That's a number that doesn't quite fit the script of those who
are economic bears."
He added the Treasury Department's impending sale of
five-year notes would also likely contribute to the selling.
"I'm sure the Street is taking the opportunity to beat up
the market a little bit to prepare for that auction," Coard
Traders were also talking about Friday's highly anticipated
speech by Federal Reserve Chairman Ben Bernanke, though there
was growing doubt he would offer hints about more economic
Speculation has been widespread that Bernanke will use his
speech at a central banker conference in Jackson Hole, Wyoming,
to signal a new monetary offensive to support a faltering U.S.
Some have predicted the Fed chairman will discuss ways the
central bank could tweak the Fed's balance sheet as a means to
put further pressure on medium and long-term interest rates and
anchor them at low levels.
But confidence is waning that Bernanke would offer a
substantial source of hope for markets.
"There really isn't much the Fed is going to do on Friday,
and there's a lot of room for disappointment," said Gennadiy
Goldberg, a fixed income analyst at 4Cast, Inc. in New York.
The selling in Treasuries improved the prospects for
Wednesday's $35 billion five-year note auction. The Treasury
Department will hold the second of the week's three scheduled
auctions at 1 p.m. (1700 GMT).
A drop in the price of five-year notes is needed, analysts
say, for the auction to go well. Nomura Securities, in a note
to clients, said the five-year yield, which is currently 0.97
percent, would be more attractive if it could be pushed up to 1
percent or above.
"The five-year auction is unlikely to be as uneventful as
the twos on Tuesday, especially as Bernanke's Jackson Hole
speech on Friday will be occupying market attention in the
background (uncertainty premium)," analysts for Nomura wrote.
The benchmark 10-year Treasury note US10YT=RR fell 10/32
in price and its yield rose to 2.19 percent from 2.16 percent
at Tuesday's close.
The 30-year bond US30YT=RR was off 18/32 and yielding
3.52 percent, up from 3.49 percent late on Tuesday.
(Editing by Kenneth Barry)