* Bernanke's testimony Tuesday to be parsed for asset
* ECB loan payback news offsets rise in German sentiment
* Benchmark U.S. yields remain locked in a tight 13 bps
By Chris Reese
NEW YORK, Feb 22 U.S. Treasuries were trading
little changed in price on Friday with nothing in the way of
U.S. economic data to influence the market as investors looked
ahead to testimony next week from Federal Reserve Chairman Ben
Treasuries began the day trading lower in price, with
traders citing a small increase in selling pressure after the
release of the German Ifo sentiment survey, which beat forecasts
and offset some of the gloom of downbeat data elsewhere in the
euro zone earlier this week.
Losses were tempered however by news that banks around
Europe will repay less than half the expected amount of crisis
loans they took from the European Central Bank a year ago, which
suggested much of the euro zone financial system was still
dependent on cheap ECB funds.
Treasury debt prices were also supported by worries over the
economic impact of automatic U.S. government spending cuts set
to begin March 1. Few analysts expect Democrats and Republicans
to reach a budget agreement ahead of the deadline to avert cuts.
Investors were also reluctant to part with lower-risk assets
like Treasuries heading into an Italian election on Sunday and
Monday as the country struggles in a deep recession.
In the absence of economic data on Friday, investors were
looking ahead to testimony from Fed Chairman Bernanke on Tuesday
for any clues as to when the central bank might consider winding
down its stimulus program of asset purchases, under which it is
currently buying $85 billion per month of Treasuries and
The latest minutes from the Federal Open Market Committee,
released this week, showed policymakers discussed slowing or
stopping Fed bond purchases aimed at reducing unemployment.
"The next big event for the marketplace will be Bernanke's
testimony next Tuesday at 10 a.m. (EST). We look for that
testimony to be a bit dovish in nature, reinforcing his view
that quantitative easing will continue for the foreseeable
future," said Tom di Galoma, managing director at Navigate
Advisors LLC in Stamford, Connecticut.
While speculation over whether the Fed will wind up its
purchase program this year has bounced Treasuries around this
week, benchmark yields remain locked in a 13 basis point range
of 1.93 percent to 2.06 percent that has held for nearly a
On Friday, 10-year notes were trading unchanged
in price to yield 1.97 percent.
"This begins the 19th session in a row where tens have
traded within 5.5 basis points of 2 percent, which maybe
shouldn't be all too surprising given the rate repressed
environment, even after Fed Minutes and deluge of data from the
past couple of days," wrote RBS' Gabriel Mann, William O'Donnell
and John Briggs.