* Thirty-year yield hits lowest since July on safety bids
* Domestic producer prices post biggest rise in 10 months
* U.S. consumer sentiment strongest in nine months
* Short-, medium-dated debt set for best week since Sept
(Updates market action, adds quote)
By Richard Leong
NEW YORK, April 11 U.S. Treasuries prices rose
in choppy trading on Friday as nervous investors pulled out of
stock markets worldwide and piled into less risky government
debt, sending the U.S. 30-year bond yield to its lowest level
The sell-off in global equities persisted in the wake of
disappointing quarterly results from JPMorgan Chase & Co.
, the biggest U.S. bank. This exerted more downward
pressure, putting the Standard & Poor's 500 index on
track for weekly drop of 2.5 percent, the steepest weekly loss
in 11 weeks.
Treasuries prices briefly dipped into negative territory
when S&P 500 and Nasdaq staged a comeback midday, but the stock
rebound faded and the selling resumed.
"This equity market meltdown has brought a 'fear' bid into
bonds," said Larry Milstein, head of government and agency
trading at R.W. Pressprich & Co. in New York.
While Treasuries prices finished the day near their session
highs, they were capped by profit-taking and selling related to
hedging on next week's corporate bond supply, traders said.
Benchmark 10-year Treasuries notes last traded
3/32 higher in price for a yield of 2.618 percent, down 1 basis
point from late on Thursday. The 10-year yield fell 11 basis
points this week and ended at the low end of its 20 basis point
trading range established since late January.
The 30-year bond was up 15/32 in price, yielding
3.477 percent, down 3 basis points from Thursday. The 30-year
yield earlier fell to its lowest intraday level since early
July, bringing its year-to-date decline to nearly 47 basis
points, according to Reuters data.
Short-to-medium Treasuries firmed modestly in price with
their yields flat to down 1 basis point.
The U.S. bond market rallied this week on renewed safe-haven
bids as well as relief buying in reaction to the minutes of the
Federal Reserve's March 18-19 policy meeting.
The intense appetite for bonds spread into this week's
auction of $64 billion worth of coupon-bearing debt, which
raised $13.5 billion in new cash for the federal government.
The FOMC minutes suggested most policy-makers wanted to
stick to a near-zero rate policy they adopted in December 2008
until the U.S. economy creates more jobs and an inflation rate
that achieves its 2 percent target.
After the Fed released its summary of economic projections
on March 19 and before the release of the latest Fed minutes,
some traders had worried the Fed might raise rates earlier and
at a faster pace than expected.
Compounding this perceived hawkish view were remarks by Fed
Chair Janet Yellen at a press conference after the March policy
meeting, when she said the Fed might increase rates a
"considerable time" after it completed its bond-purchase
program, a period she defined as "around six months."
The FOMC minutes, together with news of a mildly
below-forecast 192,000 payroll increase in March a week ago,
have sparked a rally in short- and medium-dated Treasuries,
putting them on track for their best week since September.
The two-year note yield was poised to finish 6 basis points
lower on the week and five-year yield 13 basis points lower.
"There could be more room for bonds to rally if equities
continue this washout," Milstein said.
Friday's stronger-than-expected data on domestic producer
prices and consumer sentiment capped the bond market's gains,
challenging a view that domestic inflation will remain tame for
a long time.
The Labor Department said its index of producer prices rose
0.5 percent last month for its biggest rise since June. Analysts
polled by Reuters had forecast a 0.1 percent increase.
The index's core reading, which excludes volatile food and
energy prices, posted a 0.6 percent increase in March for its
biggest monthly gain in three years.
The Thomson Reuters/University of Michigan's preliminary
April reading on the overall index of consumer sentiment came in
at 82.6, the highest since July, compared with a final reading
of 80.0 in March.
These reports augured expectations of more upbeat U.S. data
next week, which will include retail sales, consumer prices and
housing starts, analysts and traders said.
"The data will turn more positive after the tough winter.
I'm look for signs of a pickup in terms of growth," said Thomas
di Galoma, head of fixed income rates at ED&F Man Capital
Markets in New York. If the economy were to show an
acceleration, yields should climb back to the middle of their
trading ranges, di Galoma said.
Separately, the Fed bought $2.29 billion in government debt
due in 2021 to 2024, which was part of its planned $30 billion
purchases of Treasuries in April for its third round of
(Reporting by Richard Leong; Editing by James Dalgleish,
Bernadette Baum and Andrew Hay)