* Prices up on weak U.S. durable goods data
* Federal Reserve policy statement out Wednesday
* U.S. Treasury sold $32 bln of two-year debt
By Sam Forgione
NEW YORK, Jan 28 U.S. Treasuries prices edged up
on Tuesday after data showing an unexpected fall in orders for
U.S. durable goods in December spurred safe-haven bids, but
nervousness ahead of the Federal Reserve's policy decision
The Commerce Department reported that orders for
long-lasting U.S. manufactured goods fell by 4.3 percent in
"It does paint a much bleaker picture for the U.S.," said
Aaron Kohli, interest rate strategist at BNP Paribas in New
The U.S. Treasury Department sold $32 billion of two-year
debt, which will followed by the debut of $15
billion in two-year floating rate notes on Wednesday, and $35
billion in five-year notes and $29 billion in
seven-year debt on Thursday.
The new supply helped limit gains in Treasuries prices,
along with uncertainty surrounding the outcome of the Fed's
two-day policy meeting. The Fed will release its policy decision
at the close of the meeting on Wednesday afternoon.
The U.S. central bank is considering whether to further
scale back its bond-purchase program, which is aimed at holding
down long-term borrowing costs to help the economy.
"Traders just want to see what the Fed's going to do," said
George Goncalves, head of U.S. rates strategy at Nomura
Securities International in New York.
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 purchases by
another $10 billion this week.
Emerging market assets stabilized on Tuesday after three
straight sessions of intense selling, but signs of trouble in
developing economies remained fresh in traders' minds and
contributed to the modest flight to quality in Treasuries.
Investors waited to see if Turkey would hike interest rates
to defend its battered lira currency.
"It's not over," Kohli of BNP Paribas said of the rout in
emerging market assets. "There's this creeping sense that people
have that there could be more weakness around the corner."
Benchmark 10-year Treasury notes were last up
4/32 in price to yield 2.752 percent, down slightly from 2.766
percent late on Monday.
Positive U.S. economic data on home prices and consumer
confidence had little impact on Treasuries prices.
U.S. single-family home prices in November rose slightly
more than expected from October, while prices posted their
biggest year-over-over increase in almost eight years, a survey
showed on Tuesday.
The S&P/Case Shiller composite index of 20 metropolitan
areas gained 0.9 percent from October on a seasonally adjusted
basis. The 20-city composite index rose 13.7 percent
year-on-year, the largest rise since February 2006.
In a separate survey, U.S. consumer confidence rose in
January as consumers grew more optimistic about both business
conditions and the job market.
The Conference Board, an industry group, said Tuesday its
index of consumer attitudes rose to 80.7 from a downwardly
revised 77.5 in December. Economists polled by Reuters had
expected a reading of 78.1.
The Fed bought $2.99 billion in U.S. government debt that
matures May 2021 to August 2023 for its bond-purchase program,
which had little impact on bond prices.