April 9, 2014 / 1:50 PM / 3 years ago

TREASURIES-U.S. bond prices fall before auction, FOMC minutes

* U.S. to sell $21 billion in 10-year note supply

* FOMC minutes seen offering hints on rate hike timing

* Fed to buy $900 million to $1.15 billion in long-dated bonds

* Fed's Evans, Tarullo to speak about U.S. economy

By Richard Leong

NEW YORK, April 9 (Reuters) - U.S. Treasuries prices fell on Wednesday as traders trimmed their bond holdings in advance of a $21 billion auction of 10-year notes and the Federal Reserve's release of the record of its policy meeting last month.

The bond market has settled in a tight range overnight following gains spurred by mildly weaker-than-expected March jobs data on Friday.

This week's $64 billion in coupon-bearing debt supply stalled the drop in benchmark yields, keeping them near some key technical trading levels, analysts said.

"Treasuries have had a good run. There's some risk with this week's supply," said Robert Tipp, chief investment strategist at Prudential Fixed Income in Newark, New Jersey.

Benchmark 10-year Treasuries notes were down 8/32 in price with a yield of 2.710 percent, up 3 basis points from late on Tuesday and matching its 50-day moving average.

But the 10-year yield was still below its 200-day moving average of 2.721 percent, according to Reuters data.

With a short-term average holding below the longer-term average, the 10-year yield might have more room to fall, some analysts said.

The 30-year bond was down 13/32 in price for a yield of 3.565 percent, up 2 basis points on the day and nearly 3 basis points above its one-week low set on Tuesday.

The Fed was scheduled to buy $900 million to $1.15 billion in Treasuries due in 2036 to 2044, which is part of its planned $30 billion in government debt purchases in April.

Prices on shorter maturities fell less than their longer-dated issues, with their yields rising 1 to 3 basis points from Tuesday.

In "when-issued" activity, traders expected the reopening of the 10-year note originally sold in February to fetch a yield of 2.719 percent. This was lower than the 2.729 percent yield at the first reopening in March and the 2.795 percent yield at the initial offering of this issue in February.


About an hour after the 10-year note sale, analysts and investors will likely scour for hints in the minutes of the Federal Open Market Committee, the U.S. central bank's policy-setting group, on the timing of an interest rate increase.

The FOMC minutes from last month will be released at 2 p.m. (1800 GMT).

At its March meeting, the FOMC gave indications that it would end its massive bond-buying program this autumn. Fed Chair Janet Yellen, in a March 19 news conference following the meeting, said the Fed could start raising interest rates around six months later.

This sent Treasuries reeling and caused the five-year note to suffer its worst day since last July and the seven-year note to post its worst day since November, according to Reuters data.

"We doubt there will be enough consensus or any new revelations for the market to shift gears," Mary Beth Fisher, head of U.S. interest rate strategy at Societe Generale Corporate & Investment Banking, wrote in a research note.

In the futures market, the June 2015 federal funds contract dipped 0.5 basis point to 99.69, below a 2-1/2-week high set on Monday in the wake of the March nonfarm payrolls data, which showed a rise of 192,000 jobs. A Reuters poll of economists had forecast an increase of 200,000 jobs.

That contract and related options implied traders were pricing a 51 percent chance of a rate increase at the June 2015 FOMC meeting, according to CME Group's FedWatch. This was a tad above the 50 percent chance late on Tuesday.

Chicago Fed President Charles Evans will speak about the economy and monetary policy at 3:30 p.m. EDT (1930 GMT) in an event in Washington. Fed Governor Daniel Tarullo will appear at the same event later at 7:30 p.m. (2330 GMT). (Reporting by Richard Leong; Editing by Paul Simao)

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