* Fed's Bernanke to speak to NBER at 2010 GMT
* Short-lived impact from dovish FOMC minutes
* U.S. mortgage rates rise to two-year highs
* U.S. to sell 30-year notes on Thursday
By Ellen Freilich
NEW YORK, July 10 U.S. Treasuries prices fell on
Wednesday as the market distributed $21 billion worth of newly
auctioned 10-year notes and cut prices for Thursday's 30-year
The release of the Federal Reserve's minutes from its June
policy meeting highlighted more of the committee's more dovish
predilections than the market had anticipated and prices rallied
at first, erasing losses and moving into the plus column.
But Treasuries prices subsequently shifted back into
"There's less importance attached to the Fed minutes
released today because of the strength of the employment report
that was released (two weeks) after the (June 18-19 Fed policy)
meeting," said Jake Lowery, Treasury trader at ING Investment
Management in Atlanta, Georgia. "So even though the minutes were
more dovish than expected, their impact was somewhat discounted
by the continued strength in the labor market that was seen
after the Fed's last meeting."
Traders will hear remarks by Fed Chairman Ben Bernanke to
the National Bureau of Economic Research (NBER) conference at
4:10 p.m. EDT (2010 GMT). Bernanke will speak about the history
of the Fed in a talk entitled "The First 100 Years of the
Federal Reserve: The Policy Record, Lessons Learned, and
Prospects for the Future."
Lowery said the market was more likely to gain insights into
when the Fed will start to slow its $85-billion-a-month bond
purchases from Bernanke's Congressional testimony next week.
"It will be much easier for the Chairman to describe
monetary policy to Congress in a successful light after the
payrolls data we got Friday," he said. "We expect Bernanke to
emphasize the Fed's conviction that the economy is improving."
Traders said the Treasury's sale of 10-year notes got a
"soft" reception in a low-volume trading day with non-dealer
participation on the low side.
The Treasury will sell 30-year bonds on Thursday. Ahead of
that sale, 30-year bond prices fell sharply on Wednesday, down
21/32 in price as their yields rose to 3.69 percent.
On the open market, the 10-year Treasury note
last traded 10/32 lower in price with a yield of 2.677 percent,
up 4.0 basis points from late Tuesday but below the 23-month
high of 2.755 percent set Monday.
Since the June FOMC meeting and an upbeat June payrolls
report last Friday, Treasury yields have climbed and were at
23-month highs Monday before they retreated on bargain-hunting
The spike in bond yields has caused a jump in mortgage rates
which some economists worry might hurt the housing recovery.
The Mortgage Bankers Association said on Wednesday 30-year
mortgage rates averaged 4.68 percent last week, the highest
level in two years and up 10 basis points from the prior week.
Rising borrowing costs have reduced loan demand to buy a
home and to refinance. The group's mortgage activity index for
last week has fallen to its lowest level since mid-March, while
its index on refinancing has hit its lowest level in two years.
As part of its ongoing bond-buying program, the Fed bought
$3.69 billion in Treasuries that will come due April 2019
through June 2020.