* Investors to focus on Bernanke's remarks before Congress
* FOMC minutes may offer more clues on future of QE3
* Fed to buy up to $1.75 bln in long-dated Treasuries
* U.S. existing home sales seen edging up in April
By Richard Leong
NEW YORK, May 22 U.S. Treasuries prices were
little changed on Wednesday as investors awaited possible hints
from Federal Reserve Chairman Ben Bernanke on whether the U.S.
central bank might slow its purchases of bonds this year.
Speculation about the future of the Fed's third round of
large-scale asset purchases, known as quantitative easing or
QE3, has intensified ever since a better-than-expected April
U.S. jobs report earlier this month.
Traders and analysts have reckoned whether the Fed might
taper QE3, which involves monthly purchases of $85 billion of
Treasuries and mortgage-backed securities, sooner than
previously thought in response to an improving economy, albeit
one still growing at a sluggish pace.
Recent comments from several Fed policy-makers have stoked
this view, causing a sell-off in Treasuries that sent benchmark
yields to their highest level in over two months on Tuesday.
Still it is the view of Bernanke, as head of the U.S.
central bank, that carries the most weight in financial markets.
"Traders have a radar lock on Bernanke's speech this
morning, and little else will drive the markets today," said Guy
LeBas, chief fixed-income strategist at Janney Montgomery Scott
Bernanke's testimony before the Joint Economic Committee at
10 a.m. (1400 GMT) was expected to show whether the central bank
might signal it might be ready to start rolling back its
ultra-easy monetary stance after keeping interest rates near
zero and buying bonds for more than four years.
On the open market, benchmark 10-year Treasuries notes
were flat in price at 98-11/32 with a yield of 1.933
percent. The 10-year yield has risen more than 0.30 percentage
point since May 1.
The 10-year yield climbed to its highest level since March
15 on Tuesday, falling just short of 2 percent, though it
retreated after dovish comments from St. Louis Fed President
James Bullard and New York Fed chief William Dudley. A rally in
mortgage-backed securities, fueled by Dudley's comments about
the Fed being unlikely to sell its mortgage holdings, spurred
investors to buy Treasuries.
Investors might receive more clues about the Fed's thinking
on the path of monetary policy when the Fed releases at 2 p.m.
(1800 GMT) the minutes on its April 30-May 1 policy meeting.
Since it adopted quantitative easing in late 2008, the Fed's
balance sheet has ballooned to $3.3 trillion as of May 15 as its
Treasuries holdings have more than quadrupled to $1.86 trillion.
Its ownership of mortgage-backed securities totaled $1.15
trillion last week, compared with none in the September 2008
before the collapse of Lehman Brothers during the global credit
Critics have said the Fed's massive balance sheet will
hobble its ability to fight inflation down the road, and that
the billions with which it has flooded the economy may be
overheating certain markets such as stocks and junk bonds.
The U.S. central bank is scheduled to buy $1.25 billion to
$1.75 billion in Treasuries due Feb. 2036 to May 2034 at 11 a.m.
(1500 GMT) on Wednesday. On Monday, it purchased $1.450 billion
of these federal debt maturities.
After a couple of days without major economic data, the
National Association of Home Builders will release at 10 a.m.
(1400 GMT) its April report on home resales. Economists forecast
sales of existing homes came in at an annualized rate of 4.99
million units, up slightly from a 4.92 million unit pace in