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TREASURIES-U.S. bond prices rise, set for gains in first half of year
June 30, 2014 / 8:01 PM / 3 years ago

TREASURIES-U.S. bond prices rise, set for gains in first half of year

* Month-end buying spurs price gains

* Traders eye quarter-end, non-farm payrolls

* Housing, Midwest business data have little impact (Adds comments, updates prices)

By Sam Forgione

NEW YORK, June 30 (Reuters) - U.S. Treasuries prices rose modestly on Monday on month-end buying and reluctance to sell ahead of quarter-end and U.S. jobs data on Thursday, putting bond prices on track for gains in the first half of the year.

Analysts said traders avoided bets against bonds after rising prices over the quarter took many by surprise.

“People are generally buckling down their books, being less active, and waiting for the new quarter before taking on new trades,” said Jeffrey Young, interest rate strategist at Nomura Securities in New York.

The benchmark Barclays U.S. Aggregate Bond Index has risen 1.9 percent so far this quarter through last Friday, while the Barclays U.S. Treasury index has gained 1.3 percent.

For the first half of the year, the Barclays U.S. Aggregate has risen 3.82 percent, led by a rally in long-dated debt as benchmark yields have fallen nearly 0.50 percentage point. Treasuries due in 20 years or longer have earned a 12.67 percent return in the first six months, putting them on track for their strongest first-half performance in four years.

Long-dated investment-grade corporate bonds had a 10.45 percent return. Munis ranked third in total return, generating a 5.97 percent gain, according to Barclays.

On Monday, the National Association of Realtors said its Pending Home Sales Index, based on contracts signed last month, increased 6.1 percent to 103.9 in May, the highest since September of last year.

The data had little impact on Treasuries prices.

“It doesn’t mean that it’s going to be sustainable,” said Matthew Duch, portfolio manager at Calvert Investments in Bethesda, Maryland. He said the data likely would not change many economists’ weak U.S. growth forecasts.

Traders shrugged off data showing the Institute for Supply Management-Chicago business barometer fell to 62.6 in June from 65.5 in May. Economists looked for a reading of 63. The reading measures the pace of business activity in the U.S. Midwest.

Economists expect Thursday’s jobs report to show U.S. employers added 212,000 jobs in June, down from 217,000 in May, according to a Reuters poll.

Benchmark 10-year Treasuries notes traded 3/32 higher in price to yield 2.52 percent, from a yield of 2.53 percent late Friday. U.S. 30-year Treasuries bonds last traded 9/32 higher in price for a yield of 3.347 percent, versus 3.36 percent late Friday.

The Federal Reserve bought $1.03 billion of Treasuries maturing August 2039- August 2043 on Monday as part of its economic stimulus program, which had little impact on bond prices. (Reporting by Sam Forgione; Editing by Jeffrey Benkoe and Dan Grebler)

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