* Fed speakers, weak data help stabilize markets
* Treasury sells $29 bln of 7-year notes at highest yield
since July 2011
* Fed buys $5.05 billion in notes due 2017, 2018
By Luciana Lopez
NEW YORK, June 27 U.S. Treasuries prices gained
on Thursday as bond markets showed signs of stabilizing after a
dramatic selloff, as a sale of 7-year debt drew more aggressive
bidding than markets had expected.
The $29 billion of 7-year notes fetched a high yield of
1.932 percent - the highest since July 2011, but still less than
the market had expected. Indirect bidders bought their biggest
share since August 2011.
The auction "brought a renewed trading spark that punched
through levels not touched since noon last Friday," said Jim
Vogel, an interest rate strategist at FTN Financial in Memphis,
Treasuries slumped last week after U.S. Federal Reserve
Chairman Ben Bernanke said the Fed could pull back on its
$85-billion-per-month bond buying program soon as the economy
improves. But prices have largely firmed this week after the
selloff took yields to their highest in 22 months.
Also helping Treasuries recover was weaker-than-expected GDP
data this week for the first quarter, suggesting to some
analysts that the Fed might not find the economy ready to stand
on its own for months.
Fed officials have also tried to calm markets this week,
emphasizing that the U.S. central bank is not trying to clamp
down on policy too soon.
"The Fed has made efforts to talk the market back from those
assumptions" that the Fed is likely to start paring its bond
purchases in September, said Ian Lyngen, senior government bond
strategist at CRT Capital Group in Stamford, Connecticut.
Among those speakers were New York Fed President William
Dudley and Fed Governor Jerome Powell on Thursday. Each sought
to dissuade investors that monetary accommodation was fading any
time soon, going so far as to say markets have misinterpreted
the U.S. central bank's intentions.
As part of its ongoing stimulus, the Fed bought $5.05
billion in notes due 2017 and 2018 on Thursday.
Benchmark 10-year note yields have backed away
from 22-month highs of 2.67 percent, reached on Monday. Those
notes traded up 16/32 in price to yield 2.481 percent on
The notes' yields nonetheless remain significantly higher
than the 2.20 percent area they traded at before Bernanke's
comments, and above 1.60 percent at the beginning of May.
"We've found a new range. We think we'll stay in this range,
in the mid-2.40s to mid-2.60s, for the next week and then
payrolls will be a determining factor," said Ira Jersey, an
interest rate strategist at Credit Suisse in New York.
The payrolls report due next Friday comes the day after the
U.S. Independence Day holiday, which may reduce volumes and make
trading on the number more volatile.