* Quarter-end buying disappoints
* Volatility seen muted pending fresh US jobs data
* Long Treasuries post big first-half gains
(Adds Treasuries downturn, comments)
By Michael Connor
NEW YORK, June 27 U.S. Treasuries' prices turned
lower on Friday after steady gains earlier in the week, fueled
by data suggesting economic growth in America may be slower than
Yields on Friday rose on thin volumes in part on
profit-taking by traders, who saw benchmark 10-year Treasury
notes drop by about 10 basis points Monday through Thursday,
according to BNP Paribas interest-rate strategist Aaron Kohli.
"People had expected much stronger month-end and quarter end
demand," Kohli said. "To some extent that has not materialized."
Treasuries' price gains earlier in the week were supported
by the government's sharp downward revision of its estimate of
first quarter gross domestic product and by worse-than-expected
consumer spending data for May.
"It is not the kind of dedicated and price insensitive
buying the market had been expecting," Kohli said. "Most of the
moves we have been seeing over the last few days have been a
response to weak consumer expenditures or extremely
disappointing GDP numbers."
Signs of slower growth tend to bolster hopes the Federal
Reserve will keep ultra-low interest rates in place longer.
"The market is not accepting the higher growth trajectory
that the Fed and blue chip economists are telling us we will see
in the second half," said Vishal Khanduja, portfolio manager for
Calvert Investments. "That's why we aren't seeing much higher
In Friday's trading, yields on 30-year Treasuries
moved the most, falling in early trading to as low
as 3.336 percent, a level last touched on June 2. The bonds last
traded down 12/32 in price to yield 3.3649.
Ten-year notes were down 2/32 in price to yield
2.5340 percent, after hitting a low of 2.507 percent.
Long Treasuries have done well over the last six months,
according to preliminary data for the first half of 2014 ending
U.S. government debt was on track to earn a 2.65 percent in
first half of 2014, led by a 13.04 percent on Treasuries that
mature in 20 years or longer, according to indexes compiled by
For a graphic on asset returns in early 2014, please see:
YTD asset performance
Looking ahead, trading in Treasuries was unlikely to get
firm direction until the monthly employment report is released
next week, Khanduja said.
The market "is digesting" the most recent data, Khanduj
said. "It is looking for a lot more current information that's
not backwards looking. So the biggest information we will get
will be next week, when the we get the unemployment report."
(Editing by Bernadette Baum and Tom Brown)