* Weaker-than-expected Chinese data revive bids for bonds
* In-line U.S. jobless claims signal moderate job growth
* U.S. to offer details on two-year floating-rate notes
* U.S. to sell $15 bln in 10-year inflation-protected debt
By Richard Leong
NEW YORK, Jan 23 U.S. Treasuries prices rose on
Thursday as losses on Wall Street and data suggesting a slowing
in Chinese manufacturing revived safe haven bids for bonds.
The Chinese factory figures and an industry report showing
weaker factory growth in the United States reduced bets that the
Federal Reserve would accelerate its pace of reducing its
bond-purchase stimulus. This notion helped to propel benchmark
yields to their lowest levels in nearly six weeks.
"We started the day in positive territory on the Chinese
data, which was a bit concerning," said Larry Milstein, head of
government and agency trading at R.W. Pressprich & Co. in New
China's Flash Markit/HSBC PMI fell to 49.6 in January from
December's 50.5, showing a faster rate of decrease in new export
orders and employment. A reading below 50 signals a contraction
in the manufacturing sector of the world's second largest
The bond market rebound following Wednesday's losses came in
advance of the Treasury Department's announcement of details on
the debut of its two-year floating-rate notes next week.
This is the first new type of U.S. government debt security
since the introduction of Treasury Inflation-Protected
Securities in 1997.
The floating-rate note issue joins next week's fixed-rate
supply of two-year, five-year and seven-year Treasuries debt,
which analysts forecast would total $96 billion.
In the meantime, the Treasury will sell $15 billion in
10-year TIPS at 1 p.m. (1600 GMT).
While the U.S. and Chinese manufacturing data fell short of
expectations, a government snapshot of the domestic labor market
was mildly encouraging.
The U.S. Labor Department said 326,000 workers filed for
first-time unemployment benefits in the week ended Jan. 18,
matching the median forecast among economists polled by Reuters.
"The recent bag of data have been mixed at best, but it's
not enough to derail the Fed from tapering at each meeting this
year. The data have to really roll over," R.W. Pressprich's
Fed policy-makers will meet next Tuesday and Wednesday and
analysts anticipate they will decide to further shrink their
third round of quantitative easing which is aimed to hold down
long-term borrowing costs to help the economy.
In December, the Federal Open Market Committee pared its
monthly purchases of Treasuries and mortgage-backed securities
by $10 billion to $75 billion in January. The Fed's
policy-setting group is expected by some analysts to cut its
monthly purchases by another $10 billion at its upcoming
On the open market, benchmark 10-year Treasury notes
were 15/32 higher in price with a yield of 2.805
percent, down 6 basis points from late on Wednesday.
The 10-year yield touched 2.803 percent following a
weaker-than-expected rise in U.S. existing home sales in
The 30-year bond rose 26/32 in price to yield
3.713 percent, down 5 basis points from Wednesday's close. The
30-year yield hit 3.708 percent earlier, which was its lowest
level since early November, according to Reuters data.
The long-dated maturity was also bolstered by the Fed's
latest QE3 buy-back. The central bank planned to buy $1.00
billion to $1.50 billion in Treasuries due 2036-2043 at 11 a.m.
On Wall Street, the three major stock indexes fell sharply
in early trading with the Standard & Poor's 500 index
losing 0.9 percent on the weak Chinese factory data.