November 14, 2012 / 2:40 PM / 5 years ago

TREASURIES-Investors book profits, lowering prices

* Yields expected to hold near recent lows
    * Market worries about U.S. fiscal crisis, Greek debt

    By Chris Reese
    NEW YORK, Nov 14 (Reuters) - U.S. Treasury debt prices
dipped on Wednesday when investors booked profits from a
post-election rally that was driven by safe-haven buying over
concerns about a looming U.S. fiscal crisis and Europe's debt
    U.S. Treasuries briefly pared price losses earlier Wednesday
 after data showing an unexpected drop in producer prices and a
larger-than-expected dip in retail sales in October.
    Yields were not expected to stray far from their lowest
levels since September with price support from concerns over the
so-called fiscal cliff of $600 billion in U.S spending cuts and
tax increases set to start in January that could send the
economy back into recession.
    Ten-year Treasury notes were trading 6/32 lower
in price to yield 1.62 percent, up from 1.59 percent late
Tuesday. The yield on Tuesday touched 1.57 percent, which was
the lowest in 10 weeks.
    The safe-haven allure of Treasuries was also undermined on
Wednesday because Wall Street stocks were set to climb following
stronger-than-expected first quarter earnings reported late
Tuesday by Cisco Systems Inc.
    "Some real money accounts are getting flat the market from a
trading perspective however, and generally want to be buyers on
sell-offs," said Tom di Galoma, managing director at Navigate
Advisors LLC in Stamford, Connecticut. 
    Both Democrats and Republicans stood their ground on Tuesday
in their first gathering since last week's presidential and
congressional elections with disagreements over taxes preventing
a compromise on deficit reduction.
    Concerns in Europe as the IMF and the European Union failed
to agree on long-term budget goals for Greece also kept markets
edgy, despite the growing likelihood the country would receive
the aid payments due this year.
    Data on Wednesday showed U.S. retail sales fell in October
for the first time in three months. Superstorm Sandy, which hit
the northeastern United States on Oct. 29, slammed the brakes on
automobile purchases, suggesting a loss of momentum in spending
early in the fourth quarter. 
    U.S. producer prices also unexpectedly fell last month as
the cost of energy and motor vehicles tumbled, according to a
government report on Wednesday that showed little inflation
pressures in the economy. 
    Investors are looking ahead to minutes from the Federal
Reserve's October policy meeting, to be released on Wednesday
afternoon, for any clues as to whether the central bank intends
to buy more Treasuries once its "Operation Twist" stimulus
program expires at the end of December.
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