December 24, 2012 / 5:20 PM / in 5 years

TREASURIES-U.S. bond prices flat in pre-Christmas trading

* Traders refrain from making bets on U.S. fiscal worries
    * Trading volume plummets before Christmas
    * U.S. bond market closes early, to be shut on Tuesday
    * Bond prices seen holding in tight range into year-end

    By Richard Leong
    NEW YORK, Dec 24 (Reuters) - Most U.S. government debt
prices were little changed on Monday as traders moved to the
sidelines before Christmas and given the absence of a U.S.
budget deal to avert a package of automatic tax hikes and
spending cuts that are set to take effect next year.
    Analysts downplayed the day's price moves as signals of
shifts in market sentiment in one of the slowest trading days of
the year. They expected the market to trade in a tight range
into the end of the year, barring any surprises on the budget
talks in Washington. 
    There was little impetus for investors to change their bond
positions without fresh U.S. economic data or the Federal
Reserve buying or selling Treasuries for its bond programs aimed
to help the economy, analysts said.
    "Everyone is just watching Washington and what's going on
there," said Justin Lederer, Treasury strategist at Cantor
Fitzgerald in New York.
    The budget negotiations have stopped as U.S. President
Barack Obama and Congress are on a holiday break. There are
seven more days to reach a deal to avoid the "fiscal cliff,"
$600 billion of tax increases and spending cuts set to kick in
next year.
    Economists have warned that lack of a deal could cause a
U.S. recession and hurt the global economy. 
    The U.S. bond market will close early at 2 p.m. (1900 GMT),
an hour after Wall Street. U.S. and most European markets will
be shut on Tuesday, while major Asian markets will be open.
    "The markets are dead. Those traders who are working are
making sure positions don't get out of hand due to thin
trading," said Lou Brien, market strategist at DRW Trading in
    Treasuries trading volume was roughly a fifth of its average
daily turnover, according to bond broker ICAP.
    Traders have not completely abandoned hopes of a budget
deal, even if it's only a temporary fix.
    "They will probably come up with something unsatisfactory,"
DRW's Brien said.
    Cantor's Lederer said there is an increased likelihood of
the country going over the cliff, though if the White House and
Congress manage to reach a deal in early January, that should
limit the damages to the stock market and the economy.
    Benchmark 10-year notes were last 1/32 lower in
price to yield 1.775 percent, up 0.5 basis point from late on
Friday after reaching an eight-week high last week near 1.85
percent. The 10-year yield has held in a range of 1.60 to 1.90
percent since late summer.
    Thirty-year bonds fell 5/32 with a yield of
2.943 percent, up 0.9 basis point from Friday's close. Last
Tuesday, the 30-year yield broke above 3 percent for the first
time since late October on optimism over a coming fiscal pact.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below