By Karen Brettell
NEW YORK, July 22 (Reuters) - U.S. Treasuries were steady on
Monday ahead of this week's sales of $99 billion in new
intermediate-dated debt, with little fresh data on tap to give
clues over the timing of when the Federal Reserve is likely to
pare back its bond-purchase program.
Treasuries yields have fallen over the past two weeks as top
Fed officials including Chairman Ben Bernanke said that the U.S.
central bank's plans to taper purchases are still dependent on
economic data and that it will hold benchmark interest rates at
record low levels for a long time to come.
Data on Monday that showed that U.S. home resales fell
unexpectedly in June made some question whether the recent
backup in mortgage yields may weigh on the housing recovery.
'This report shows that housing is more sensitive to
interest rates than most economists have been anticipating,'
said Steven Ricchiuto, chief economist of Mizuho Securities in
New York, in a note to clients.
A surge in prices to a five-year high, however, suggested
the housing market recovery remained on course.
The Fed officials' comments have led investors to start
pushing back ideas of when the Fed will start reducing its
monthly $85 billion purchases to later in the year from
expectations for September, as thought earlier.
'The market seems to have discounted that again because
Bernanke is using forward guidance and became very dovish,' said
Mary Beth Fisher, head of U.S. interest rate strategy at Societe
Generale in New York.
'I don't think that changes anything, I think you would need
unemployment to weaken significantly in the next two reports for
them to not go ahead and begin tapering,' she added.
Most economists continue to expect that the Fed will begin
to reduce its bond buys in September, according to a Reuters
poll, even though some market participants pushed back their
expectations to later in the year.
Next week's July U.S. payrolls report will be the next major
economic catalyst that is likely to give signs over the timing
of a Fed pullback. It is due for release on Friday, Aug. 2.
More direction could also come after Fed policymakers meet
on July 30 and 31. A statement will be released on the second
Benchmark 10-year note yields traded at 2.49
percent on Monday, down from a two-year high of 2.76 percent on
July 8 but well up from 1.60 percent at the beginning of May.
The Fed bought $1.46 billion of Treasuries maturing between
2036 and 2042 on Monday as part of its ongoing purchases. It
will buy between $3.00 billion and $3.75 billion in notes due
2019 and 2020 on Tuesday.
Uncertainty over the Fed's timeframe could add pressure to
this week's sales of five-year and seven-year debt. The notes
are the most sensitive to interest rate policy.
The Treasury will sell $35 billion in two-year notes on
Tuesday, $35 billion in five-year notes on Wednesday and $29
billion in seven-year notes on Thursday.
(Additional reporting by Luciana Lopez; Editing by James
((firstname.lastname@example.org)(+1 646 223 6274)(Reuters
Keywords: MARKETS USA BONDS/
(-------MARKET SNAPSHOT AT 2:52 p.m. EDT (1852 GMT)------- Change vs Current Nyk yield Three-month bills 0.01 (-0.02) 0.010 Six-month bills 0.065 (-0.01) 0.066 Two-year note 100-04/32 (-) 0.306 Five-year note 100-10/32 (-02/32) 1.309 10-year note 93-19/32 (-02/32) 2.490 30-year bond 87-16/32 (+01/32) 3.559 DOLLAR SWAP SPREADS LAST Change U.S. 2-year dollar swap spread 17.50 (unch) U.S. 3-year dollar swap spread 16.75 (unch) U.S. 5-year dollar swap spread 18.50 (+0.25) U.S. 10-year dollar swap spread 20.50 (unch) U.S. 30-year dollar swap spread -1.75 (+0.75))
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