* 30-year rises over 1 point; 10-year yields below 2.5
* Traders ready for Treasury debt sales
* Market looking ahead to Fed talks, payrolls data next week
(Adds New York close, quotes and late prices)
By Michael Connor
NEW YORK, July 25 U.S. Treasury debt prices
jumped on Friday, with long maturities getting the largest lift
from investors exiting drooping stock markets and positioning
portfolios ahead of a Federal Reserve policymakers' meeting next
Prices, including sharp gains that left yields on 30-year
Treasuries near lows not seen in a year, were also helped by
month-end purchases of government debt and disappointment among
traders over soft spots in U.S. durable goods data.
Benchmark 10-year yields fell back below 2.50 percent.
"We saw some flattening as a function of upcoming supply,"
said Kim Rupert, managing director at Action Economics in San
Francisco. "We have the twos, fives and sevens next week. We
also have the FOMC (Federal Open Market Committee). Nobody
expects any policy changes but everybody is looking for further
tapering. That is keeping the front end under wraps."
Debt prices rose in early trading, despite a
heftier-than-forecast 0.7 percent overall increase during June
of orders for long-lasting U.S. manufactured items. Analysts and
traders focused on weaknesses in airline and other sectors that
shook optimism about U.S. economic growth.
"The underlying tone of this report was disappointing," said
TD Securities strategist Millan Mulraine. "The weak performance
in core capital goods shipments ... suggests that this segment
of the economy is unlikely to contribute much to economic
The 30-year Treasury bond last traded up 1-1/32 in price,
cutting its yield to 3.235 percent, after peaking at
3.304 percent in overseas trading ahead of the durable goods
Ten-year Treasuries were up 11/32 in price to
yield 2.469 percent. The yield had been at 2.503 percent just
before the durable goods report.
"With that disappointment, it adds still another layer of
negative color for the second quarter," said Jim Vogel, interest
rate strategist at FTN Financial in Memphis, Tennessee.
"Recent business surveys suggest that business is turning up
but we are not getting confirmation of that in the numbers this
The reported increase in orders for durable goods, which
range from toasters to aircraft that are meant to last three
years or more, was above economists' expectations for a 0.5
percent rise and followed a 1.0 percent drop in May.
Non-defense capital goods orders excluding aircraft, a
closely watched proxy for business spending plans, rebounded 1.4
percent after declining 1.2 percent the prior month. The gain in
the so-called core capital goods outpaced economists'
expectations for only a 0.5 percent increase.
Many Treasury traders had an eye to next week, when reports
on American employment and gross domestic product will be
issued, Vogel said. Both reports often move markets.
(Reporting by Michael Connor; Editing by James Dalgleish and