* Yields dip, January U.S. existing home sales lower than
* Fed buys $1.25 bln worth of debt maturing between 2036 and
* Next week's U.S. consumer confidence data on investors'
By Marina Lopes
NEW YORK, Feb 21 U.S. Treasury debt prices
inched up on Friday as investors questioned whether a string of
weaker-than-expected economic data is due to severe weather
affecting activity in the short term or a symptom of a more
structural economic slowdown.
Friday's tepid housing sales data kept investors largely
sidelined, analysts said. The market shrugged off a
larger-than-expected drop in U.S. existing homes sales, which
declined by 5.1 percent in January, the National Association of
Buyers stepped into the market as the trading session wore
on. One fund manager attributed the moves up in price to
anticipation that it is not just severe weather behind the weak
"The market is ending the week hedging itself in case all
this weakness is not 100 percent weather related," said Wilmer
Stith, co-manager of the Wilmington Broad Market Bond Fund in
Benchmark 10-year U.S. Treasury notes rose 5/32
in price, pushing the yield down to 2.737 percent. The
thirty-year bond traded up 13/32 of a point in
price, bringing the yield down to 3.701 percent.
One strategist pointed toward a potential momentum play that
would see buyers coming into the market if the 10-year yield
closes in on the 3 percent mark.
"We saw good buying in January and I would imagine those
bids would return if we get near those levels in the coming
days," said Bill O'Donnell, an interest rate strategist at RBS
Securities in Stamford.
Analysts said they expect next week's consumer confidence
survey figures from the Conference Board, due on Tuesday, to
have a more significant impact on the market.
Incoming data is already expected to be weaker given the
severe winter conditions that prevailed through most of the
month. The latest consensus estimate of economists polled by
Reuters indicates the February consumer confidence index will
decline slightly to 80.4 from 80.7 .
The Fed, as part of its quantitative easing program, bought
$1.25 billion debt maturing between 2036 and 2043 on Friday. The
purchases appeared to have little impact on current prices.