* Benchmark yields hover near two-month lows
* U.S. December homes sales weaker than expected
* Emerging market rout supports safe-haven bids
By Sam Forgione
NEW YORK, Jan 27 U.S. Treasuries prices were
little changed on Monday, paring earlier losses after data
showing sales of new U.S. single-family homes fell more than
expected in December.
The 7.0 percent decline in home sales along with a continued
sell-off in emerging market assets spurred safe-haven bids for
Treasuries. Benchmark yields remained at near the two-month lows
hit on Friday.
"The market is already skittish," said Wilmer Stith,
portfolio manager at Wilmington Trust in Baltimore. "The fact
that we got these weaker-than expected housing numbers just
plays into that hand of more volatility."
The U.S. Commerce Department said sales fell to a seasonally
adjusted annual rate of 414,000 units. November's sales were
revised to a 445,000-unit pace from the previously reported
Economists polled by Reuters had expected new-home sales,
which are measured when contracts are signed, to slow to a
457,000-unit pace in December.
The rout in emerging market assets that began last week
continued on Monday, adding to demand for bonds. Emerging
markets have been roiled by worries about U.S. Federal Reserve
policy, slowing growth in China and political problems in
Turkey, Argentina and Ukraine.
The benchmark emerging stock index hit a
4-1/2-month trough on Monday, falling 1.7 percent. The index was
on track for the biggest one-day fall since August.
"The flare-up in emerging markets that we saw last week is
still fresh on the minds of investors," said Gabriel Mann, U.S.
rates strategist at RBS Securities in Stamford, Connecticut.
Treasuries prices pared losses but remained slightly down on
nervousness a day ahead of the Fed's two-day policy-setting
meeting. The Fed will consider whether to further scale back its
bond-purchase program, which is aimed at holding down long-term
borrowing costs to help the economy.
Benchmark 10-year Treasury notes were slightly
lower in price with a yield of 2.739 percent, up from an earlier
yield of 2.71 percent.
In December, the Fed reduced its monthly purchases of
Treasuries and mortgage-backed securities by $10 billion to $75
billion. Some analysts expect the Fed will cut its monthly
purchases by another $10 billion this week. The Fed will issue
its policy statement at the close of its meeting on Wednesday
"There are always nerves around the Fed meetings," said
Mann, adding that the mood could have spurred earlier selling of
On Wall Street, two of the three major stock indexes
stumbled, with the benchmark Standard & Poor's 500 index
falling 0.32 percent.