By Luciana Lopez
NEW YORK, Nov 22 (Reuters) - Prices for longer-dated U.S.
Treasuries rose on Friday, retaking ground lost earlier in the
week on concerns the Federal Reserve might soon slow its massive
asset-purchase program meant to help prop up the economy.
The curve this week shifted to its steepest since 2011, with
the jump between shorter-dated yields and longer-dated yields
rising, as investors saw the Fed possibly paring back its
asset-purchase program as soon as this year.
The question of when the Fed might slow its $85 billion per
month in purchases of Treasuries and mortgage-backed securities
has become a key factor not just for U.S. government debt but
for a broad range of asset classes around the world.
'It's a quick reversal from where we were Wednesday, (when)
it steepened out nicely,' said Justin Lederer, Treasury
strategist at Cantor Fitzgerald in New York.
Treasuries sold off sharply on Wednesday after Federal
Reserve meeting minutes suggested the tapering process could
begin at an upcoming meeting.
But Fed officials have underscored that any pullback
decision depends on data about the health of the world's biggest
If the bank does pare its buying of longer-dated Treasuries,
long-term rates would tend to rise. At the same time the Fed has
insisted that official short-term rates would remain low, with
some economists seeing the federal funds rate near zero even to
'Therein lies the rub because what the Fed giveth to the
front end, it taketh from the back,' said David Ader, Treasury
strategist at CRT Capital Group in Stamford, Connecticut.
While shorter-term Treasuries posted small changes,
anticipating next week's supply, benchmark 10-year Treasury
notes rose 10/32 in price to yield 2.750 percent,
compared to 2.784 percent late on Thursday.
The 30-year bond rose 27/32 in price to yield
3.836 percent, from 3.884 percent late on Thursday.
On Friday, Atlanta Fed President Dennis Lockhart told CNBC
the debate over reducing the pace of the Fed's massive
bond-buying program would be 'on the table' at the Fed's next
policy meeting on Dec. 17-18.
Lockhart said he believed the net impact of the Fed's asset
purchases had been positive, and that 'quite a bit of progress'
had been made to help spur job growth and reduce unemployment.
Lockhart is not a voting member of the policy-setting Federal
Open Market Committee in 2014.
Kansas City Fed President Esther George also said a tapering
discussion would occur at the Fed's next meeting and seemed to
characterize such conversations as routine.
'These are discussions we have at each meeting. So I would
expect we will continue to discuss that as we go forward,' she
said, speaking on the sidelines of a conference in Paris.
Analysts said Treasuries could be rangebound next week, when
the U.S. Thanksgiving holiday will keep markets closed on
The Fed on Friday bought $1.57 billion in Treasuries
maturing between May 15, 2038, and Feb. 15, 2043, as part of its
QE3 asset-purchase program.
The Treasury will sell $32 billion in two-year notes, $35
billion in five-year notes and $29 billion in seven-year notes
(Additional reporting by Ellen Freilich; Editing by Chizu
Nomiyama and James Dalgleish)
Keywords: MARKETS USA BONDS/
(--------------------- MARKET SNAPSHOT AT 1616 EST (2116 GMT) --------------------- Dec T-Bond 131-29/32 (+20/32) Dec 10-Year note 126-20/32 (+ 8/32) Change vs Current Nyk yield Three-month bills 0.075 (unch) 0.076 Six-month bills 0.095 (+0.00) 0.096 Two-year note 99-30/32 (-01/32) 0.283 Five-year note 99-17/32 (+02/32) 1.352 10-year note 100 (+10/32) 2.750 30-year bond 98-15/32 (+27/32) 3.836 DOLLAR SWAP SPREADS LAST Change U.S. 2-year dollar swap spread 9.75 (-0.25) U.S. 3-year dollar swap spread 8.50 (+0.50) U.S. 5-year dollar swap spread 10.25 (+1.25) U.S. 10-year dollar swap spread 6.50 (+2.25) U.S. 30-year dollar swap spread -8.50 (+3.25))
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