LONDON Nov 23 U.S. bond prices inched higher on
Friday as bond investors opted to hold low risk assets over the
weekend as they wait for news on the euro zone and with U.S.
budget negotiations to provide longer-term support.
* U.S. Treasury futures were 3/32 higher at
133-31/64, rising in line with German Bunds over the course of
the European session.
* Even as equities and the euro posted small gains in
anticipation of a deal to provide aid to Greece next week, bond
investors took a more cautious approach, eyeing Sunday's
potentially disruptive regional elections in Spain.
* "I believe a Greek deal is in this price and we've moved
on, and Spain is next. The Catalan elections will be closely
watched," a London-based Treasuries trader said.
* Spain is struggling to contain its debt problems and
elections in its Catalonia region, where a secessionist movement
has gathered support, could undermine the country's stability
and spook investors.
* "I bought some (Treasuries) this morning and I'm a dip
buyer from here," the trader said.
* Treasury prices are likely to remain at the whim of
investor perceptions of progress in U.S. cross-party talks to
avoid the 'fiscal cliff' of $600 billion of spending cuts and
tax hikes due early next year.
* U.S. debt prices tumbled at the start of the week when
politicians voiced their willingness to compromise and avoid the
crunch of recession-inducing cutbacks, but a deal remains a long
* "It's easy to say you have good intentions at the start of
the negotiating process, but we are bound to have some
disappointments along the way... we will see some safe haven
flow re-emerge in the coming weeks before we get that deal,"
said Philip Marey, strategist at Rabobank in Utrecht.