TREASURIES-Prices flat to lower before 30-year auction

Thu Nov 13, 2008 12:14pm EST
 
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* Treasuries prices flat to lower before 30-year auction

* Treasury to sell $10 billion in re-opened 30-year bonds

* Two-year yields hover near 4-year lows

* Treasuries digesting supply from 3-, 10-year auctions

* Jobless claims jump, underscores weak economic outlook

By Ellen Freilich

NEW YORK, Nov 13 (Reuters) - U.S. Treasury debt prices were unchanged to lower on Thursday before a 30-year bond auction, the last sale of the Treasury's three-part $55.0 billion quarterly refinancing.

Shortly before noon and just over an hour before the bond sale, the 30-year bond was down more than a full point with its yield, which moves inversely to price, rising to 4.23 percent from 4.17 percent late on Wednesday.

At 1 p.m. (1800 GMT), the Treasury will sell $10 billion of re-opened 30-year bonds as the last leg of its quarterly refunding.

"The 30-year bond is under pressure, which is mostly auction related," said Mary Ann Hurley, senior Treasuries trader in Seattle at brokerage D.A. Davidson.

The Treasury sold $25 billion of 3-year notes on Monday and $20 billion of 10-year notes on Wednesday in the first two parts of the quarterly refinancing.

An indecisive stock market offered Treasuries little clear direction, but even when stocks weakened or erased gains, Treasuries had a hard time picking up steam.

"Treasuries have had a particularly strong run with the two-year testing the 2003 low yields and other issues farther out the curve testing more recent low yields," said John Canavan, analyst at Stone & McCarthy Research Associates.

"It's difficult to sustain a bid for Treasuries at this point without active safe-haven activity," he said.

The 30-year Treasury bond auction scheduled for the afternoon was restraining prices, Canavan said.

"And we're still trying to digest three- and 10-year supply from this week's prior refunding auctions," he added.  Continued...

 
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