May 16, 2014 / 1:05 PM / 3 years ago

TREASURIES-Yields rise as housing data beats expectations

* Treasuries yields rise after strong U.S. housing data
    * Ten-year note yields hold above key 2.50 percent level
    * Fed to buy $0.85 bln-$1.10 bln bonds due 2036-2044

    By Karen Brettell
    NEW YORK, May 16 (Reuters) - U.S. Treasuries prices fell on
Friday after better-than-expected housing data pointed to a
strengthening economy, pulling benchmark 10-year yields up from
six-month lows.
    U.S. housing starts jumped in April and building permits hit
their highest level in nearly six years, offering hope that the
troubled housing market could be stabilizing. 
    "Housing starts were better than expected, they were higher
in just about every region with the Midwest having the biggest
jump. That's causing the selloff right now," said Michael Chang,
an interest rate strategist at Credit Suisse in New York.
    The data comes after a dramatic bond rally on Thursday that
came despite solid economic releases.  
    Much of the move was cited as being due to a large number of
traders betting on yield increases having to cover their
positions, while weakness in peripheral European debt also
sparked safety buying for U.S. bonds.
    Benchmark 10-year notes were last down 3/32 in
price to yield 2.505 percent, up from a low of 2.473 on
Thursday, the lowest since October 30.
    Thirty-year bonds fell 2/32 in price to yield
3.33 percent, after earlier falling as low as 3.303 percent on
Thursday, the lowest since June.
    The Fed will purchase between $0.85 billion and $1.10
billion in bond due from 2036 and 2044 on Friday as part of its
ongoing purchase program.

 (Editing by Chizu Nomiyama)

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