April 15, 2014 / 1:20 PM / 3 years ago

TREASURIES-Prices steady after weak NY manufacturing data

* Prices steady, 30-year bond prices rise
    * NY manufacturing disappoints, inflation data benign
    * Fed to buy $1.75 bln - $2.25 bln notes due 2020, 2021

    By Karen Brettell
    NEW YORK, April 15 (Reuters) - U.S. Treasuries prices were
steady on Tuesday after a weak manufacturing survey for New York
state pointed to sluggish economic momentum, and as consumer
price pressures remained benign.
    A gauge of manufacturing in New York state grew at a slower
rate than the previous month and below expectations in April
after a slight decline in new orders and a drop in inventories,
the New York Federal Reserve said in a report on Tuesday.
    The Labor Department also said on Tuesday its Consumer Price
Index increased 0.2 percent last month as a rise in food and
shelter costs offset a decline in gasoline prices. The CPI index
had gained 0.1 percent in February. 
    "The market had a little bit of trouble determining
direction, Empire manufacturing came in weaker," said Gennadiy
Goldberg, an interest rate strategist at TD Securities in New
York. Yields fell on the manufacturing weakness, after rising
slightly on the inflation data, he added.
    Benchmark 10-year notes were last unchanged in
price to yield 2.65 percent, down from 2.66 percent just after
the data was released.
    Thirty-year bonds rose 3/32 in price to yield
3.48 percent, down from 3.50 percent.
    Investors are focused on a busy week of data releases for
signs on the strength of the economy as the Federal Reserve
pares its bond purchases, and look toward interest rate hikes
that most expect to begin next year.
    Housing data on Wednesday will be evaluated to see if
activity picked up, after months of subdued data that many blame
on bad weather.
    "When the clouds part if we don't get a lift to housing that
could be a big issue," said Goldberg. A Philadelphia
manufacturing survey released on Thursday will also be a focus.
    Fed Chair Janet Yellen will also speak on Wednesday about
the economy. She spoke on Tuesday about markets regulation, but
did not discuss monetary policy.
    Inflation will also continue to be a focus as the Treasury
is due on Thursday to sell $18 billion in five-year Treasury
inflation-protected securities (TIPS).
    U.S. inflation-linked bonds have been among the worst
performers since the Fed last year indicated that it would begin
tapering its bond purchases, with investors worrying over what
catalyst will lead inflation higher.
    Inflation has been running below the Fed's 2 percent target,
which may make it difficult for the U.S. central bank to
increase benchmark interest rates if price pressures don't
increase, as many Fed officials say they continue to expect.
    The auction will come before an early market close on
Thursday and the closure of the bond market the following day
for the Good Friday holiday.
    The Fed will buy between $1.75 billion and $2.25 billion in
notes due 2020 and 2021 on Tuesday as part of its ongoing
purchase program.

 (Editing by James Dalgleish)

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