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TREASURIES-Prices dip as Fed sees easing unemployment
January 30, 2013 / 8:11 PM / 5 years ago

TREASURIES-Prices dip as Fed sees easing unemployment

* Fed says unemployment to decline under appropriate policy
    * U.S. GDP shows unexpected contraction in fourth quarter
    * Treasury sells $29 billion of 7-year notes

    By Chris Reese
    NEW YORK, Jan 30 (Reuters) - U.S. Treasury debt prices
traded at lower levels for a fifth day on Wednesday after the
Federal Reserve said economic growth will proceed at a moderate
pace and unemployment will gradually decline under appropriate
monetary policy.
    The central bank also reiterated in a statement following
its two-day policy meeting it will continue its current economic
stimulus programs, buying mortgage and U.S. government debt,
until the labor market improves "substantially." 
    "The statement came out pretty much not only as I expected,
but as the market expected. No change in timing of the bond
purchases; that's probably what most people are looking for. The
market reacted in a way that said the Fed delivered what was
expected - little movement," said Fred Dickson, chief market
strategist at D.A. Davidson & Co in Lake Oswego, Oregon.
    Treasuries began the day trading lower as investors pushed
for price concessions amid auctions of $99 billion of U.S.
government debt this week.
    Prices of U.S. government debt briefly moved higher after
data showing a surprise contraction in gross domestic product in
the world's biggest economy in the fourth quarter. Prices
returned to negative territory however as analysts pointed to
some positive signs for economic growth in the components of the
report, like rising consumer spending. 
    The Treasury on Thursday sold $29 billion of seven-year
notes, after having sold $35 billion of two-year notes on Monday
and $35 billion of five-year notes on Tuesday. Investors
typically try to push Treasuries prices down around the time of
such auctions.
    Following the release of the Fed's policy statement,
benchmark 10-year notes were trading 4/32 lower in
price to yield 2.012 percent, up from 2.001 percent late
Tuesday.
    Yields on benchmark notes have been testing the 2 percent
level since Monday, breaching that figure for the first time
since April. But yields did not get traction above that level
until Wednesday, helped by a bump in risk appetite in Asian
trading overnight.
    Investors are now waiting for non-farm payrolls data on
Friday. The Fed wants the unemployment rate to drop closer to
6.5 percent from the current 7.8 percent.

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