| NEW YORK
NEW YORK Aug 20 U.S. Treasury bond prices edged
lower on Wednesday as investors consolidated gains made last
week and prepared for the release of the minutes from the
Federal Reserve's last meeting at the end of July for any clues
on future U.S. monetary policy.
A seasonal slowdown in trading and a lack of U.S. economic
data to provide impetus for taking big positions contributed to
a lackadaisical morning session, traders and strategists said.
"Today the market has been consolidating the gains made last
week, topped by Friday's big surge. Looks like we are continuing
that move ahead of the Fed minutes today," said Ellis Phifer,
market strategist at Raymond James in Memphis, Tennessee.
The Fed releases the minutes of the July 29-30 meeting at 2
p.m. EDT (1800 GMT).
"I think the minutes will tell us more of the same and that
they plan to end QE (quantitative easing) in October. They will
also reiterate that they think they are moving toward their
goals even though there are continued risks in the economy. They
are not going to suggest the economy is going full steam ahead,"
Some of the Fed's counterparts at the Bank of England voted
unexpectedly to raise interest rates this month, according to
minutes of the BOE's policy meeting of Aug. 6-7. Two policy
makers voted to shift rates higher, marking the first time in
three years BOE officials had voted for an increase.
In late morning trade, the benchmark 10-year U.S. Treasury
note traded down 3/32 of a point in price, pushing
the yield up to 2.41 percent. The 30-year long bond
dropped 6/32, lifting the yield to 3.22 percent.
Investor concerns over the conflict between Ukraine and
Russian-backed rebels ebbed on Wednesday. The leaders of Russia
and Ukraine are set to meet next week for the first time in
months to try to end their confrontation over the separatist
rebellion in eastern Ukraine.
"Geopolitical risk has temporarily abated, despite a refusal
by both Ukraine and Russia to support an
unconditional cease-fire. The Russian convoy of 270 trucks
carrying humanitarian aid remained parked at the Ukrainian
border, though the Red Cross reportedly has reached a
safe-passage agreement with Russia," Michael Woolfolk, global
markets strategist at Bank of New York Mellon wrote clients.
"We continue to believe that bias for Treasury yields is
lower, with the potential for another drop in 10-year yields to
year-to-date lows before Labor Day," Woolfolk wrote.
Another factor keeping many investors on the sidelines is
this Friday's speech by Fed Chair Janet Yellen at the annual
Jackson Hole, Wyoming conference of central bankers.
Expectations among economists are running toward a continuation
of loose U.S. monetary policy for the foreseeable future.
(Reporting by Daniel Bases; Editing by James Dalgleish)