* U.S. new home sales drop 14.5 pct in March
* Market manufacturing PMI dipped to 55.4 in April
* Five-year note auction meets fair demand
(Adds comments and updated prices)
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 selloff in recent sessions.
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 blame the new home sales data on the weather, as
the case was in early winter," said Justin Lederer, an interest
rate strategist at Cantor Fitzgerald in New York.
Some traders had expected a continuation of stronger 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 Russia, Ukraine, the European Union and the United States
issued a joint statement on Thursday to ease tensions in
The difference between the share of investors who are short
longer-dated Treasuries and 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.
Traders also said that a revival of concern over the Ukraine
crisis has supported safe-haven bids after last week's joint
statement had only limited success in suppressing separatist
conflict in the country.
"A little flight to quality was all it took for traders to
cover some of their short positions," said Josh Stiles, director
of research at IDEAglobal in New York.
Treasuries prices maintained their higher levels after the
Treasury Department's auction of $35 billion in five-year notes
on Wednesday, which was the second round of $96 billion in new
supply this week. The Treasury will sell $29 billion in
seven-year notes on Thursday.
"It was not, by any means, a weak auction," said Lederer of
The bid-to-cover ratio, a measure of overall bidding
interest, came in at 2.79, compared with a 12-month average of
2.65. Foreign central banks and other indirect bidders bought
44.93 percent of the latest five-year supply, close to the
12-month average of 45.63 percent.
The benchmark 10-year U.S. Treasury note was
last up 11/32 in price to yield 2.69 percent, from 2.726 percent
late Tuesday. Prices on 30-year Treasury bonds were last up
20/32 to yield 3.47 percent, from 3.5 percent late Tuesday.
Prices on five-year Treasury notes were last up
5/32 to yield 1.71 percent, from 1.75 percent late Tuesday.
The Federal Reserve bought $2.28 billion in Treasuries
maturing between August 2021 and February 2024 on Wednesday as
part of its ongoing asset purchases, which had little effect on
On Wall Street, all three major U.S. stock indexes traded
lower as gains in Boeing and Gilead were offset
by slides in AT&T and the wider biotech sector.
(Reporting by Sam Forgione; Editing by Peter Galloway)