August 30, 2013 / 1:50 PM / 4 years ago

TREASURIES-Prices rise on weak data, safety bid before long weekend

* U.S. consumer spending, price data supportive for bonds

* Safe-haven U.S. debt held before 3-day weekend, geo-political risk

* Pre-weekend short-covering cited

By Ellen Freilich

NEW YORK, Aug 30 (Reuters) - U.S. Treasuries prices rose slightly on Friday, supported by subdued data on U.S. consumer spending and inflation and by geo-political risk before a three-day weekend.

Underlying concern about a possible military strike against Syria made it unlikely that investors would want to be short safe-haven U.S. debt, particularly over a long weekend, traders said.

U.S. financial markets will be closed on Monday for the Labor Day holiday.

"There's short-covering before a long weekend," said Thomas di Galoma, a head of bond trading at ED&F Man Capital Markets in New York.

The Commerce Department reported that U.S. consumer spending rose just 0.1 percent and inflation was tame in July. Economists had estimated consumer spending rose 0.3 percent last month.

The data on the first month of the third quarter provided a cautionary note on the economy as the Federal Reserve weighs cutting back its massive bond-buying program.

Excluding food and energy, the price index for consumer spending rose just 0.1 percent, leaving core prices up 1.2 percent from a year ago, below the Fed's 2 percent target.

Though such figures would seem to argue against the U.S. central bank's trimming the $85 billion in bond purchases it is making each month to keep interest rates low, many economists believe the Fed will announce small cuts to its bond-buying program at its Sept. 17-18 policy meeting.

Month-end portfolio rebalancing was also supportive for bonds. Portfolios managed against benchmark indexes often buy longer-dated Treasuries around month-end.

Worries that Western forces could soon launch a military strike against Syria in response to chemical attack by that nation's government have fueled safe-haven bids for Treasuries this week.

The benchmark 10-year Treasury note was up 1/32 in price, its yield easing to 2.76 percent from 2.766 percent late on Thursday. The 30-year Treasury bond was up 5/32 in price. Its yield eased to 3.71 percent from 3.718 percent late on Thursday.

The timing of the Fed's so-called taper has become a central question for markets, with Treasury yields shooting up more than 100 basis points in recent months as analysts have increasingly seen that date approaching.

But with data on the U.S. economy still often mixed, investors have been reluctant to push yields to much higher levels.

Focus has now shifted to August nonfarm payrolls data, due Sept. 6. Those will be the last nonfarm payrolls released before the Fed's next meeting.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below