* Dealers buy bonds to close hedges on corporate supply
* U.S. consumers gloomiest in over a year-TR/U. Michigan
* U.S. financial markets closed Monday for holiday
By Richard Leong
NEW YORK, Jan 18 U.S. Treasury debt prices rose
on Friday as Thursday's market sell-off lured bargain-minded
investors and dealers bought bonds to exit hedges on the
corporate debt issues they underwrote this week.
A report from Thomson Reuters and the University of Michigan
showing Americans' anxiety about the economy at its highest in
over a year undercut optimism from upbeat housing data earlier
this week, reviving some safe-haven bids for government debt.
Treasuries prices briefly extended Thursday's losses
overnight on better-than-expected growth data from China. While
the world's second-biggest economy recorded its weakest growth
in 13 years in 2012, it captured momentum in the fourth quarter
to set up for a growth pickup in 2013.
"We hit the top range overnight, but it wasn't enough to
push yields higher. It's just part of the retracement from the
sell-off yesterday," said Gennadiy Goldberg, an interest rate
strategist with TD Securities in New York.
Benchmark 10-year Treasury notes were last up
11/32 in price at 98-1/32. The 10-year yield fell 4 basis points
on the day to 1.845 percent after touching a session high of
On the week, the 10-year yield dipped 2 basis points but was
still 9 basis points higher than at the end of 2012.
The bond market gradually recovered as traders bought
Treasuries to profit from the Federal Reserve's daily bond
purchase. The central bank bought $1.57 billion in long-dated
debt, part of its $45 billion monthly program aimed to lower
Anxiety about Congress not raising the $16.4 trillion
federal debt ceiling was another factor that has pushed
benchmark yields from their eight-month highs in early January.
Some investors bought more Treasuries to hedge against
weaker U.S. growth if the federal government were to default on
its debt and enact a series of spending cuts because it cannot
raise more cash.
However, others reckoned a U.S. default would damage the
long-term appeal of Treasuries and cause a further downgrade in
its credit rating.
In the credit default swap market, the five-year cost to
insure against a U.S. default hovered at 44 basis points, its
highest level since August 2011, during the first debt ceiling
fight between U.S. President Barack Obama and Republican
lawmakers, according to data firm Markit.