* U.S. new home sales drop 14.5 pct in March
* Market manufacturing PMI dipped to 55.4 in April
* Traders await $35 bln five-year note auction
By Sam Forgione
NEW YORK, April 23 U.S. Treasuries yields fell
on Wednesday after weak U.S economic data spurred safe-haven
bids and traders covered short positions against bonds following
a recent selloff.
The Commerce Department said sales of new U.S. single-family
homes dropped 14.5 percent to a seasonally adjusted annual rate
of 384,000 units in March, declining for a second consecutive
Financial data firm Markit, meanwhile, said its preliminary,
or "flash," U.S. Manufacturing Purchasing Managers Index dipped
to 55.4 in April from 55.5 in March. Economists polled by
Reuters expected a reading of 56.0.
"You cannot continue to attribute this weakness in the
economy to the weather, and that's why people were a little
surprised," said Stanley Sun, interest rate strategist at Nomura
Securities International in New York.
Some traders had expected a continuation of better U.S.
economic data to show that activity was improving after a
brutally cold winter.
Traders also said market participants were covering short
positions after a selloff in safe-haven bonds in recent sessions
after a joint statement from Russia, Ukraine, the European Union
and the United States on Thursday to ease tensions in Ukraine.
The difference between the share of investors who are short
longer-dated Treasuries than those who are long rose to its
highest level in about 11 months, a J.P. Morgan Securities
survey released on Tuesday showed.
The share of "short" investors exceeded the share of "long"
investors by 23 percentage points on Monday, up from 21 points
last week. This was the most since May 28, 2013, it said.
"The market got itself a bit short," said Kim Rupert,
managing director of global fixed income at Action Economics in
San Francisco. "As prices decline, buyers will step in."
Traders awaited the Treasury Department's auction of $35
billion in five-year notes on Wednesday, the second round of $96
billion in new supply this week. The Treasury will sell $29
billion in seven-year notes on Thursday.
The benchmark 10-year U.S. Treasury note was
last up 8/32 in price to yield 2.7 percent, from 2.726 percent
late Tuesday. Prices on 30-year Treasury bonds were last up
11/32 to yield 3.48 percent, from 3.5 percent late Tuesday.
Prices on 5-year Treasury notes were last up 6/32
to yield 1.70 percent, from 1.75 percent late Tuesday.
(Reporting by Sam Forgione)