LONDON Jan 31 U.S. Treasury debt prices
advanced in Europe on Thursday after the Federal Reserve pledged
to keep economic stimulus in place to bring down unemployment.
The U.S. central bank left its monthly $85 billion bond
purchase programme in place, arguing that the support was needed
even as it indicated a recent stall in economic growth was
likely to be temporary.
"It looks like the Fed is not going to be in a hurry to do
anything on its policy stance and that's supporting the market,
especially the front end," a trader said.
The benchmark U.S. 10-year T-note was last up 3/32 in price
to yield 1.98 percent, pulling away from a
nine-month high of 2.037 percent hit on Wednesday. Month-end
buying as investors readjust their portfolios and bond buybacks
by the Fed were keeping Treasuries firm although significant
falls in the benchmark yield were seen as unlikely before
Friday's market-moving non-farm payrolls report.
Although no one had expected a radical change in the Fed's
policy stance, some market players had been worried it could
rejig its statement to reflect uneasiness among some Fed board
members about its asset-buying programme.
"We expect the Fed will continue its bond-buying programme -
mortgage-backed securities and Treasuries - until late 2013 ...
That said, the Committee might begin earlier to gradually
decrease the monthly purchase amount from the current $85
billion in order to ensure a smooth transition," UniCredit
strategists said in a note.
The focus is now moving to January payrolls data, due on
Friday, as an unexpectedly strong improvement in the job market
could spark speculation that the Fed may wind up its bond-buying
programme earlier than expected.
Analysts polled by Reuters expect U.S. employers added
160,000 new jobs this month, up marginally from 155,000 new
positions added in December. The unemployment rate is expected
to be unchanged from December at 7.8 percent.