* Strong new-home sales data puts pressure on yields
* Chinese yuan stabilizes after drops, capping bond buys
* Fed bought $1.25 bln in treasuries maturing 2038 to 2043
By Marina Lopes
NEW YORK, Feb 26 U.S. Treasury debt prices were
flat on Wednesday, erasing earlier gains after
better-than-expected data on the sale of new homes.
The U.S. government bond market enjoyed a brief safe-haven
rally after Russian President Vladimir Putin put combat troops
on high alert for war games near Ukraine, following the toppling
of its ally Viktor Yanukovich as president, traders said.
"That unrest is going to create a flight to quality bid, but
until you have something more definite, prices are going to
remain range bound," said Dimitri Delis, a fixed income
strategist at BMO Capital Markets in Chicago.
U.S. single-family home sales surged to a 5-1/2-year high in
January, surprising analysts after last week's data showed
housing starts fell their most in nearly three years due to
severe winter weather.
Benchmark 10-year yields bounced off lows of 2.6816 percent
just as the data was released, their lowest levels in one week,
but have since rebounded to 2.70 percent.
Benchmark 10-year note yields have held between 2.65 percent
and 2.78 percent for the past two weeks and traders see the debt
as unlikely to move out of that range until there is fresh
information about the health of the economy.
Ten-year notes were unchanged in price, with
yields at 2.701, Thirty-year-yields were up 4/32 in price,
sending yields down to 3.654 percent from Tuesday's close of
Traders await both a two-year floating rate note auction and
a five-year note auction, due later in the day.
The Fed bought $1.25 billion in treasuries maturing between
2038 and 2043 as part of its continuing bond buying program.
Volumes were low overnight, but investors closely monitored
China's yuan, which has shed more than 1.5 percent since mid
January, as the central bank urges state-owned banks to sell its