Bonds News

TREASURIES-Bonds edge up, awaiting week's data, Bernanke

NEW YORK, July 9 (Reuters) - U.S. Treasury prices edged upon Monday in thin trade, as investors continued to bet the Federal Reserve would hold interest rates steady this year in the aftermath of a robust jobs report on Friday.

In a quiet session, U.S. government bond investors kept a watch on stock markets in case a safe-haven bid for Treasuries out of riskier assets should develop and also awaited a speech by Federal Reserve Chairman Ben Bernanke on inflation scheduled for Tuesday and some potentially market-moving data later in the week.

Benchmark 10-year yields had climbed to 2-week highs around 5.20 percent on Friday, after U.S. June nonfarm payrolls were stronger than expected and the government sharply revised higher the numbers for April and May, causing a bond market selloff.

The 5.20 percent area remained a key level on Monday, with 5.25 percent and 5 percent still still seen as the top and bottom of the 10-year note’s near term yield range, respectively, analysts said.

The next main focus for the market is likely to be the Fed Chairman’s appearance on Tuesday, analysts said.

“I think Bernanke is going to indicate that the economy is a bit stronger than expected and will mention core inflation,” said Doug Roberts, chief investment strategist with Channel Capital Research in Shrewsbury, New Jersey.

“The trade deficit report, retail sales and oil prices are the three big items that will influence the Treasury market most this week,” which will confirm or deny investors’ impression that the economy is growing more strongly than anticipated, Roberts added.

The May trade deficit, a guide to the pace of economic growth in the second quarter, is due on Thursday. June retail sales follow on Friday. Crude oil in New York is trading near 10-month highs around $72 per barrel.

Friday’s jobs data was seen as the exclamation point at the end of a string of recent data suggesting the economy is growing at a faster pace than originally forecast. Investors have now pretty much discounted any chance the Fed will cut the current fed funds rate of 5.25 percent anytime soon in an effort to spur growth.

Early on Monday, the benchmark 10-year note's price edged up 4/32 for a yield of 5.17 percent US10YT=RR, compared with 5.19 percent late on Friday. Bond yields and prices move inversely.