Bonds News

TREASURIES-Bonds slip as safe-haven bids ease before data

NEW YORK, Feb 13 (Reuters) - U.S. Treasury bond prices slipped on Wednesday, as traders pared safe-haven bond positions ahead of a government report on retail sales which offers a snapshot on consumers and the overall economy.

Appetite for U.S. government debt was also suppressed by demand for U.S. equities, as traders weighed the impact of billionaire investor Warren Buffett’s proposal to reinsure $800 billion in U.S. municipal bonds.

“It’s a follow-through from Tuesday. There’s a bit more money committed to equities,” said Georges Yared, chief investment officer at Yared Investment Research at Wayzata, Minnesota.

On Wednesday, Treasuries sagged and stocks rallied on Buffett’s plan, which initially eased fears of the impact from a potential credit rating downgrade of bond insurers and the securities they guarantee.

However, bond losses and stock gains dwindled as doubts emerged whether Buffett’s offer would benefit the banks and financial companies that hold securities backed by bond insurers. Lingering fears about a U.S. recession also pulled stocks from their Wednesday peaks.

Those economic worries could either be soothed or stoked by the government’s January report on retail sales due at 8:30 a.m. (1330 GMT).

U.S. retail sales likely fell 0.2 percent last month, a slight improvement from the 0.4 percent drop in December, according to recent poll of economists by Reuters.

Factoring out soft auto sales, consumer spending was likely stronger in January. Economists forecast a 0.2 percent increase in sales, excluding autos, following a 0.4 percent drop in December.

While traders are scaling back their safe-haven positions, fed rate futures indicate they still expect the Federal Reserve to trim its target rate by at least another quarter percentage point at its March 18th policy meeting. The Fed’s current target rate is 3.00 percent.

The price on two-year Treasury debt US2YT=RR, which is most sensitive to the market's outlook on Fed policy, was down 2/32 at 100-11/32. Its yield which moves inversely with price was last traded at 1.95 percent, up 3 basis points from late Tuesday.

Benchmark 10-year notes US10YT=RR traded 9/32 lower in price at 98-12/32 for a yield of 3.70 percent, up 3 basis points from late Tuesday. (Reporting by Richard Leong; Editing by Tom Hals)