January 29, 2013 / 9:01 PM / in 5 years

TREASURIES-Prices dip as investors seek to pay less at auctions

* Yields for 10-year notes hold just below 2 pct
    * Treasury auctions $35 billion of five-year notes
    * U.S. consumer confidence slips in January to 1-year low

    By Chris Reese
    NEW YORK, Jan 29 (Reuters) - U.S. Treasury debt prices eased
for a fourth day on Tuesday as investors pushed to undermine
prices amid sales of $99 billion of U.S. government notes this
    However, losses were limited because of a reluctance to push
benchmark yields above the important technical level of 2
percent ahead of the end of a two-day Federal Reserve meeting on
Wednesday, and key employment data on Friday.
    Treasuries prices were higher on Tuesday morning after data
showing consumers lost confidence in the economic outlook, but
fell later in aggressive efforts to cheapen Treasuries going
into a five-year note auction.
    Treasuries "were actually doing a little bit better in the
morning as far as prices go, and then they started to
deteriorate going into the auction," said Mary Ann Hurley, vice
president of fixed income trading at D.A. Davidson & Co in
    The Treasury auctioned $35 billion of five-year notes on
Tuesday afternoon after selling $35 billion of two-year notes on
Monday. The Treasury will sell $29 billion of seven-year notes
on Wednesday.
    "We have the seven-year (auction) tomorrow, the Fed meeting
ends tomorrow, and non-farm payrolls on Friday and Treasuries
are having a hard time doing anything with so many big events
coming," Hurley said.
    Benchmark 10-year notes were trading 9/32 lower
in price with yields rising to 1.996 from 1.961 percent late
Monday. The yields briefly broke above 2 percent on Monday for
the first time since April.
    "Monday saw yields reach levels not seen since last April
and while we've yet to see a decisive wave of buying, we're
cognizant the prior attempts to push yields into this zone have
proven buying opportunities," said Ian Lyngen, senior government
bond strategist at CRT Capital LLC in Stamford, Connecticut.
    While technical signals don't yet have the momentum for
yields to decisively pierce 2 percent, he said, the conclusion
of the Fed's policy meeting and the monthly jobs data could
change the near-term outlook.
    Investors will scour the Fed policy statement on Wednesday
for hints of uneasiness within the central bank around its
asset-buying program.
    Hints along those lines in the minutes from the December
meeting, released on Jan. 3, sparked a selloff in Treasuries
that shook them from their ranges of recent months, bumping up
    Any further suggestion that the bank could pare back or end
its latest round of quantitative easing before the close of 2013
could have a similar effect.
    Nonfarm payrolls data on Friday could also set the tone for
Treasuries trade. The Fed wants to see unemployment closer to
6.5 percent from its current 7.8 percent, with some analysts
saying central bank policy is on hold until that happens.
    The outlook for the economy was dented on Tuesday after data
showed consumer confidence falling to the lowest level in more
than a year as Americans became more pessimistic about the
economic outlook and their financial prospects in the wake of
the expiration of the payroll tax holiday. 
    Thirty-year bonds traded 20/32 lower in price to
yield 3.179 percent, up from 3.142 percent late Monday. Bond
yields on Tuesday briefly reached 3.184 percent, marking the
highest since late April.
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