* Waning of worries on Syria erodes safety bid for
* U.S. nonfarm payrolls data on Friday will be key
* Fed buys $1.47 billion in long-dated Treasuries
By Luciana Lopez and Richard Leong
NEW YORK, Sept 4 U.S. Treasuries prices fell on
Wednesday as investors saw a Western strike against Syria as
less likely, with yields on short- to medium-term debt hitting
two-year highs on speculation about when the Fed might tighten
Strong auto sales data also helped pull investors into
equities and away from safe-haven assets such as U.S.
Prices for benchmark 10-year notes and 30-year bonds pared
early gains to turn negative as equities advanced.
"The bond market did see some flight to quality last week
when there was more tension regarding Syria," said Kim Rupert,
managing director of fixed-income analysis at Action Economics
in San Francisco.
"But the fact that the U.S. has delayed on a strike has
unwound some of the safe-haven buying and has given equities a
leg higher," she added.
Trading in longer-dated debt has been recently volatile on
views the U.S. Federal Reserve could slow its asset-buying
But short-to-medium-term yields surged on Wednesday to their
highest since July 2011 on speculation over the timing of the
Fed's first rate increase.
"The market is adjusting to the idea that low rates are not
going to be here forever," said Thomas Roth, executive director
of U.S. government bond trading at Mitsubishi UFJ Securities USA
in New York.
The yield on two-year Treasuries last traded at
0.462 percent, from 0.418 percent late on Tuesday, while the
yield on five-year notes was 1.737 percent, compared
to 1.682 percent late on Tuesday.
Investors were also looking to Friday's nonfarm payrolls
data for August, which will help guide the Federal Reserve's
decision on when to slow its $85 billion per month in buying of
Treasuries and mortgage-backed securities.
"The Fed is on track to taper in a couple of weeks, barring
a big downside surprise on non-farm payrolls," said Robert Tipp,
chief investment strategist with Prudential Fixed Income in
Newark, New Jersey.
Benchmark 10-year Treasury notes dipped 9/32 in
price to yield 2.895 percent, from 2.863 percent late Tuesday.
The 30-year bond slid 5/32 in price to yield
3.802 percent, compared to 3.793 percent late on Tuesday.
Economists polled by Reuters forecast U.S. employers added
180,000 jobs in August, leaving the unemployment rate unchanged
from July at 7.4 percent, the lowest since December 2008.
The Fed's next policy meeting will be on Sept. 17-18.
Other recent data suggested the U.S. economy, while still
growing, has slowed due to sluggish global demand and a spike in
The government reported the U.S. trade gap grew a tad more
than expected in July as exports slipped after contributing to a
huge contraction in the deficit in June.