April 25, 2013 / 4:36 PM / in 5 years

TREASURIES-U.S. bond prices fall ahead of seven-year debt auction

* U.S. auction of $29 bln 7-year notes last of week
    * Fed to skip U.S. government debt purchases on Thursday

    By Richard Leong
    NEW YORK, April 25 (Reuters) - U.S. Treasuries prices
slipped on Thursday as investors prepared for an upcoming $29
billion auction of seven-year notes, the last part of the
government's $99 billion offerings of longer-dated debt this
    Although the market was modestly weak due to the new supply,
bond yields remained locked in a tight trading range, as
investors awaited fresh clues on the state of the labor market
and the Federal Reserve's assessment on the economy next week.
    Fed policy-makers will meet next Tuesday and Wednesday, and
the closely watched monthly payrolls report for April will be
released at the end of the week, on May 3.
    Trading between buyers and sellers has been evenly matched
with benchmark yields almost unchanged so far this week,
analysts said.
    "When things are this balanced, whenever there's any little
blip, there's a counter-position that emerges," said Jim Vogel,
interest rate strategist at FTN Financial in Memphis, Tennessee.
    Bond prices briefly fell earlier after the government
reported that new claims for jobless benefits fell more than
expected, offsetting a recent wave of disappointing albeit
bond-friendly data.
    Claims for new jobless benefits fell to 339,000 last week,
the U.S. Labor Department said. 
    Benchmark 10-year Treasury notes were down as
much as 7/32 in price in reaction to the jobless claims. They
last traded 5/32 lower at 102-16/32, with a yield of 1.720
percent, up 1.7 basis points from Wednesday.
    The 10-year yield was about 7 basis points above a more than
four-month low of 1.643 percent set on Tuesday.
    In "when-issued" activity, traders expected the new
seven-year note issue due in April 2020 to sell
at a yield of 1.1620 percent, which is lower than the 1.248
percent in March and on track to be the lowest since November.
    Analysts and traders anticipated decent demand at the final
Treasuries auction of the week following average bidding at the
two-year and five-year note sales.
    The U.S. Treasury will release the results of the seven-year
auction shortly after 1 p.m. (1700 GMT).
    Longer-dated bond prices were also bogged down by the
absence of the Fed, which was not scheduled to buy government
debt for its bond program, known as QE3, which is aimed at
supporting the U.S. economy.
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