January 31, 2013 / 4:01 PM / 5 years ago

TREASURIES-Prices volatile as U.S. data mixed; jobs data awaited

* Chicago PMI index at highest in January since April
    * U.S. jobless claims bounce off 5-year low
    * Nonfarm payrolls data awaited on Friday

    By Luciana Lopez
    NEW YORK, Jan 31 (Reuters) - Prices for U.S. Treasuries were
little changed in choppy trading on Thursday after data painted
a mixed picture of the U.S. economy, with uncertainty about
growth in coming quarters keeping yields within recent ranges.
    Investors also looked ahead to key nonfarm payrolls data on
Friday for more light on whether jobs are growing fast enough to
satisfy policymakers.
    Initial jobless claims bounced off five-year lows to levels
consistent with tepid job growth, data showed on Thursday, with
claims rising more than expected. 
    Hopes that those claims could settle into a pace of about
325,000 by the end of the first quarter were shaken by the data,
said Jim Vogel, interest rate strategist at FTN Financial in
Memphis, Tennessee.
    "You've now got to think about the idea of the jobless
claims setting in the 360 (thousand) to 370 (thousand) region
once we get past January," he added.
    However, the pace of business activity in the U.S. Midwest
picked up in January from a more than three-year low the month
before as new orders jumped. 
    Ten-year Treasury yields continued testing the 2 percent
level, as they have since Monday, but found traction difficult. 
    While the easing of global stresses, including the euro zone
debt crisis, means that "people aren't really desperate to own
Treasuries," there are still question marks keeping investors
wary, said Kim Rupert, managing director of global fixed income
analysis at Action Economics LLC in San Francisco.
    From the possibility of automatic spending cuts at the start
of March to lingering worries that the Fed will at some point
cut off its easing spigot, investors are reluctant to push
Treasuries outside recent ranges, she said.
    "We're still just trying to get a clean reading, but it
doesn't look like growth is going to pick up substantially
anytime soon," she said.   
    Ten-year Treasuries could see yields within the range of
around 1.70 percent to 2.10 percent in coming sessions, said
William O'Donnell, head of U.S. Treasury strategy at RBS
Securities in Stamford, Connecticut. 
    Recent higher yields have lured some investors back into
buying, he said. "I think people like the levels."
    Thursday's data came after the U.S. Federal Reserve ended a
two-day meeting on Wednesday by leaving in place its $85 billion
per month asset buying program as the economy was paused.
     Ten-year notes traded flat to yield 1.992
    Thirty-year bonds traded 2/32 lower to yield
3.183 percent from 3.1822 percent late on Wednesday. 
    After a week packed with economic data, including
disappointing fourth-quarter GDP figures, and the Fed meeting,
investors are now turning their attention to the last major
milestone of the week: nonfarm payrolls on Friday.
    The Fed's goal is for the unemployment rate to drop closer
to 6.5 percent, but analysts in a Reuters polls see the
unemployment rate staying at the current 7.8 percent.
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