By Luciana Lopez
NEW YORK, July 24 (Reuters) - Prices for U.S. Treasuries
slid on Wednesday as stronger-than-expected economic data
pointed to expansion in the euro zone private sector, with
investors eyeing a sale of U.S. debt later in the session.
Euro zone private industry bounced back to growth this month
as factories increased output for the first time in well over a
year, business surveys suggested on Wednesday.
The news helped drive investors into riskier assets such as
stocks, said Andrew Wilkinson, chief economic strategist with
Miller Tabak & Co. LLC. in New York.
'Likewise, the yield on the 10-year U.S. note has once again
rejected sub-2.50 percent levels on signs of growing risk
appetite,' he added.
The benchmark 10-year note dropped 23/32 in
price on Wednesday to yield 2.592 percent, from 2.507 percent
late on Tuesday.
The 30-year bond dropped 1-05/32 in price to
yield 3.650 percent, up from 3.58 percent late on Tuesday.
Investors were also awaiting a $35 billion auction of
five-year notes scheduled for 1 p.m. (1700 GMT).
'The continued cheap funding should help spur demand from
investors wishing to put on carry trades, which are getting back
in vogue,' said Nomura analysts in a note to clients.
The U.S. Treasury sold $35 billion in two-year notes on
Tuesday in a sale analysts called uneventful. Capping the $99
billion in new intermediate debt issuance this week, the
Treasury will sell $29 billion in seven-year notes on Thursday.
With little significant economic data scheduled for this
week, markets are waiting for two key events in the coming week:
a two-day policy meeting by the U.S. Federal Reserve and July
nonfarm payrolls data.
The Fed meets on Tuesday and Wednesday, and investors will
scour the statement on the second day for any hints of when the
bank might begin slowing its $85-billion-per-month purchases of
Treasuries and mortgage-backed securities.
Most economists continue to expect that the Fed will begin
to reduce its bond buys in September, though some have pushed
back their expectations to later in the year.
The payrolls data are due on Aug. 2. The health of the labor
market will play a major role in the Fed's decision to pull back
on bond buying.
Policymakers want to see the unemployment rate closer to 6.5
percent from its current 7.6 percent.
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(-------MARKET SNAPSHOT AT 8:59 a.m. EDT (1259 GMT)------- Sept T-Bond 134 (-1-02/32) Sept 10-Year note 126-11/32 (-20/32) Change vs Current Nyk yield Three-month bills 0.025 (unch) 0.025 Six-month bills 0.065 (unch) 0.066 Two-year note 99-26/32 (-10/32) 0.348 Five-year note 99-31/32 (-11/32) 1.380 10-year note 92-24/32 (-23/32) 2.592 30-year bond 85-32/32 (-1-05/32) 3.650 DOLLAR SWAP SPREADS LAST Change U.S. 2-year dollar swap spread 15.75 (-1.50) U.S. 3-year dollar swap spread 17.00 (+0.75) U.S. 5-year dollar swap spread 18.50 (unch) U.S. 10-year dollar swap spread 20.00 (unch) U.S. 30-year dollar swap spread -2.50 (unch))
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