February 11, 2013 / 4:35 PM / 5 years ago

TREASURIES-Prices hold steady ahead of U.S. debt supply

* Prices firm, yields hold in recent range
    * Treasury to sell $72 billion in three-, 10-, 30-year bonds
    * Fed buys $1.45 bln in bonds due 2036-2042
    * Focus on sequester ahead of Tuesday's State of the Union

    By Karen Brettell
    NEW YORK, Feb 11 (Reuters) - U.S. Treasuries held steady on
Monday before new Treasury supply this week, and as investors
focused on President Barack Obama's State of the Union address
on Tuesday.
    The Treasury will sell $72 billion in new debt, including
$32 billion in three-year notes on Tuesday, $24 billion in
10-year notes on Wednesday and $16 billion in 30-year bonds on
    New Treasury supply this week may begin to weigh on prices,
though large buybacks by the Federal Reserve are expected to cap
    "The market needs to digest the supply that is coming this
week," said Sean Simko, portfolio manager at SEI Investments in
Oaks, Pennsylvania.
    The supply is seen as unlikely, however, to knock the market
out of the range that it's been trading in for the past few
    "The big picture hasn't changed, there are still the ongoing
issues of slow growth and uncertainty," said Simko. "Until we
really start seeing headlines that are changing the bigger
picture we're going to stay in this range."
    Benchmark 10-year Treasuries were steady in
price on Monday to yield 1.96 percent. The notes are seen
trading in a range from around 1.90 percent to 2.04 percent.
    The Fed bought $1.45 billion in long dated debt due from
2036 to 2042 on Monday and plans further long-dated purchases
this week as well as buybacks in the 10-year sector and
five-year sector.
    Attention is also expected to focus on President Barack
Obama's State of the Union address on Tuesday, which will be
watched for any signs that lawmakers are likely to reach a deal
to avert automatic spending cuts.
    The White House said on Friday that government spending cuts
due to take effect on March 1 would have harsh consequences for
ordinary Americans and the U.S. economy. 
    "We're several weeks away from the soft date of the
sequester so people will be looking to see if any progress is
made," said Jason Rogan, managing director in Treasuries trading
at Guggenheim Partners in New York.
    "As we get closer to March, I think it will help to move the
market one way or another with the rhetoric coming out of
Washington," he added.
    Federal Reserve Vice Chairman Janet Yellen is also due to
speak on Monday about the economic recovery at 1 p.m. (1800 GMT)
    Trading volumes were lessened overnight on Monday as China
and Japan both closed markets for national holidays.
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