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TREASURIES-Prices gain as higher yields lure buyers
October 18, 2012 / 3:01 PM / 5 years ago

TREASURIES-Prices gain as higher yields lure buyers

* Prices gain as yield backup lures some buyers
    * Higher jobless claims temporarily boost prices
    * Intermediate debt volatile on Fed speculation

    By Karen Brettell
    NEW YORK, Oct 18 (Reuters) - U.S. Treasuries prices gained
o n T hursday after a three-day rise in yields brought in some
buyers and after data showed that the number of Americans filing
new claims for unemployment benefits rose last week.
    Yields have jumped this week on stronger economic data and
as investors take greater hope that Spain will get credit
support from Europe's bailout fund, boosting risk-taking and
reducing demand for safe-haven debt.
    "We're retracing a little bit of the drastic move we've
seen," said Rick Klingman, a Treasuries trader at BNP Paribas in
New York."We are seeing a little bit of better real money buying
at these levels, and we've hit yield targets that some people
    Benchmark 10-year notes rose 8/32 in price to
yield 1.80 percent, near the 200-day moving average and down
from 1.82 percent late on We dnesday. The yield has risen from
1.66 percent on Friday.
    Thirty-year bonds rose 22/32 in price to yield
2.97 percent, after closing at 3.00 percent on Wednesday.
    There was heavy selling of Treasuries on Wednesday as
investors adjusted for the improving economic data and the
apparently more stable European situation, which has boosted
riskier assets like stocks and hurt bonds.
    This shift is likely to keep yields more elevated than in
previous weeks, said Sean Murphy, a Treasuries trader at Societe
Generale in New York. "The 'risk on' trade is strengthening," he
    Prices temporarily extended gains after Thursday's report
showing U.S. jobless claims rose in the latest week, though the
data still pointed to a slowly healing labor market.
    "It was a little bit higher than expected," said Murphy.
    Speculation that the Federal Reserve may modify language in
its guidance over how long it will hold rates down also caused
some volatility in intermediate-dated debt, traders said.
    The U.S. central bank has said it will hold rates near zero
until 2015. But some investors are speculating that due to the
improving data, the timeline could be shortened when the Fed
meets next week.

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