December 31, 2013 / 2:35 PM / in 4 years

TREASURIES-Prices near flat on year's last trading day

* Volumes expected to be light
    * 10-year yields hover just below 3 percent level
    * Year ahead to include Yellen leadership of Fed

    By Luciana Lopez
    NEW YORK, Dec 31 (Reuters) - Prices for U.S. Treasuries
dipped slightly on Tuesday, with investors seen unlikely to take
large positions as they closed out their books on the last
trading day of the year.
    While yields on the benchmark 10-year note rose slightly,
they remained below the 3 percent level, breached last week
after the U.S. Federal Reserve earlier this month said it would
slow its massive bond-buying program.     
    In addition, the bond market will close early on Tuesday
ahead of the New Year's Day holiday on Wednesday. That holiday
closure helped keep trade volumes thin on Tuesday.
    "I'd be surprised to see anything major, but it is month
end, quarter end," said Justin Lederer, an interest rate
strategist at Cantor Fitzgerald in New York.
     The 10-year Treasury note slipped 5/32 in price
on Tuesday to yield 2.993 percent, from 2.976 percent on Monday.
Last week that yield hit its highest since July 2011.
    The 10-year yield has jumped this year by about 125 basis
points on the recovery in the world's biggest economy and the
resulting pull back in stimulus by the Fed. 
    The Fed will see further changes early in 2014 as vice chair
Janet Yellen takes the reins from Ben Bernanke. 
    A final vote on her confirmation is set for Jan. 6 when the
Senate returns after a holiday break. She is widely expected to
be approved. 
    "There are going to be a lot of personnel changes at the
Fed," said Thomas Simons, an economist at brokerage Jefferies &
Co, noting also changes in the vice chair and other regional
    "I think that the tone is still going to remain basically
the same as it was in 2013 and prior," he added. "Yellen
definitely shares a lot of the core views that Bernanke does."
    Yellen is perceived as dovish, emphasizing the importance of
employment. She has been a strong advocate of the Fed's
aggressive measures in recent years to bolster the economy.
    That could help keep policy at the Fed loose for years yet,
with short-term interest rates near zero as inflation pressures
remain subdued. 
    At 7.0 percent, the unemployment rate - though at a
five-year low - remains well above the level Fed policymakers
would like to see.
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