(Adds late New York prices, comment)
By Daniel Bases
NEW YORK Aug 21 U.S. Treasuries drifted higher
on Thursday, showing little reaction to stronger-than-expected
economic data while investors held out for any developments from
the annual central banker get-together in Jackson Hole, Wyoming.
The highlight of the meeting, starting later Thursday and
sponsored by the Kansas City Federal Reserve, is the speech on
Friday by Fed Chair Janet Yellen at 10 a.m. EDT (1400 GMT),
where she is expected talk about labor markets.
"We have fairly light volumes. People are looking ahead to
Yellen. Not really sure what to expect there. Yesterday's
minutes were definitely a little more hawkish than expected but
doesn't mean much for tomorrow, given Yellen is in the dovish
camp," said Justin Lederer, an interest rate strategist with
Cantor Fitzgerald in New York, referring to the release on
Wednesday of minutes from the Fed's last meeting in July.
The minutes showed the Fed discussed the merits of raising
interest rates sooner than anticipated if stronger jobs market
recovery trends stay in place.
"But now after today's data you are in a really mixed data
environment," Lederer said.
Benchmark 10-year U.S. Treasuries rose 6/32 of a point in
price, to yield 2.40 percent. The 30-year long bond
was up 20/32 of a point in price, pushing the yield,
which moves in the opposite direction, down to 3.19 percent.
One dominant theme contributing to low U.S. yields for the
past couple of months, says Amitabh Arora, head of G-10 rates
strategy at Citigroup in New York, has been the low and falling
inflation rate in Europe.
"The story there is really one of low inflation going lower,
growth starting to disappoint and the assessments that whatever
the policy response from the European Central Bank, it is not
going to be strong enough," Arora said.
A second factor for the general drift up in rates has been
U.S. economic data.
"It is not that the data in the U.S. is not inconsequential,
but the bar is pretty high. You need a Q3 that is well in excess
of 3 percent of GDP growth to make an impact on this market
because we have had fairly disappointing data so far this year,"
Earlier, data showed the number of Americans filing new
claims for unemployment benefits fell more than expected in the
week ended Aug. 16 while the number of people still receiving
benefits after an initial week of aid fell to the lowest level
A private sector indicator of future U.S. economic activity
rose more than expected in July while manufacturing activity in
the U.S. mid-Atlantic region expanded in August at its highest
level since March 2011. U.S. home resales hit a 10-month high in
July, a fourth consecutive month of gains.
The Fed has targeted U.S. benchmark interest rates to be in
a range between zero and 0.25 percent since December 2008.
(Editing by Jeffrey Benkoe and Chizu Nomiyama)